The Lord Chancellor: Leave of Absence

Lord Falconer of Thoroton: My Lords, before business begins, may I take the opportunity to inform the House that I shall be undertaking a ministerial visit to Ipswich on Friday 20 January? Accordingly, I trust the House will give me leave of absence.

Advisory Committee on Business Appointments

Lord Goodhart: asked Her Majesty's Government:
	What plans they have for the future of the Advisory Council on Business Appointments.

Lord Bassam of Brighton: My Lords, before I start, I ought to wish the noble Lord a happy birthday. I am sure the House will wish to do the same.
	In July 2004, the Prime Minister asked Sir Patrick Brown to undertake a review of the business appointment rules. Sir Patrick Brown's report was published on 20 December. In publishing the report, the Government have asked the Public Administration Committee for its views on Sir Patrick's recommendations as part of its inquiry into the role and independence of the ethical regulation of government, which includes the business appointments processes.

Lord Goodhart: My Lords, does the Minister accept that the Advisory Committee on Business Appointments—I apologise for the slip of the pen—is of considerable importance and value in this country in preserving high ethical standards and it would be most unfortunate if it were to cease to exist? Does he also agree that it is plainly desirable that its recommendations should be strictly observed by outgoing Ministers in the same way that they are observed by outgoing senior civil servants?

Lord Bassam of Brighton: My Lords, I share the noble Lord's admiration for the Advisory Committee on Business Appointments. We are particularly grateful to the noble and learned Lords, Lord Mayhew of Twysden and Lord Morris of Aberavon, and the noble Lords, Lord Maclennan of Rogart and Lord Wilson of Tillyorn, for their valuable work. We are particularly grateful that, during the period that the Public Administration Committee will consider further matters referred to it, they are continuing with their work. The work has been invaluable since 1975, and it will inform the Public Administration Committee in its deliberations and consideration of the broader and wider issues relating to the regulatory framework.

Lord Forsyth of Drumlean: My Lords, what is the point of having committees such as the Advisory Committee on Business Appointments, the Committee on Standards in Public Life or the committee that advises on the composition of this House if the Government and government Ministers consistently ignore their recommendations?

Lord Bassam of Brighton: My Lords, I understand the import of the noble Lord's question, but Ministers have an extremely good reputation and record for sticking to, and listening carefully to, the advice that is given to them by the advisory committee. Our system of government and the regulatory framework around governance work extremely well. I am sure that most Members of your Lordships' House would agree with that sentiment.

Baroness Wilcox: My Lords, does the Minister agree, that when it comes to upholding standards, anything that stands in the way of this Government gets swept aside?

Lord Bassam of Brighton: My Lords, I do not accept that at all. Quite frankly, the record of the last government on standards in public life is not exactly whiter than white. I do not think that noble Lords opposite should be allowed to forget that.

Lord Brooke of Sutton Mandeville: My Lords, pursuant to the Minister's answer to my noble friend Lord Forsyth, on how many occasions in the past 30 years has the advice been disregarded?

Lord Bassam of Brighton: My Lords, I am not aware that the main recommendations to Ministers, or to Crown officials, have been set on one side or ignored.

Lord Roberts of Conwy: My Lords, quite apart from advice given by this council, the fact of the matter is that retiring Ministers are obliged to consult this body before they accept jobs in the private sector. At the same time, it is very well known that there are examples of retiring Ministers from the present Government who failed to consult this body,

Lord Bassam of Brighton: My Lords, I am not aware of any retiring Minister who has failed to consult the advisory committee. I would be extremely interested to hear from the noble Lord, and for him to publish his allegation that any of our former Ministers have failed to consult it.
	{**6**}

Baroness Williams of Crosby: My Lords, I declare an interest as a former member of this distinguished advisory council. Does the Minister agree that while there is a requirement on Ministers and senior civil servants to seek the advice of the committee, there is no requirement in either case to abide by that advice? There is, therefore, a major constitutional question to be discussed as to whether at some point they should be obliged to take the advice offered by the committee.

Lord Bassam of Brighton: My Lords, of course the noble Baroness, with her distinguished record in public service, is absolutely right on that point. It is open obviously to former Ministers and former Crown office holders to consider the advice that they are given. They do not have to stick to it absolutely. Of course there may well be some circumstances where they may think it would not be appropriate, and actually where it is not appropriate, but by and large I think that former Ministers and former Crown office holders listen very carefully to the advice they are given and act on it.

Afghanistan

The Earl of Sandwich: asked Her Majesty's Government:
	What steps they are taking to protect all those involved in development and reconstruction during the continuing conflict in Afghanistan.

Baroness Amos: My Lords, we take security in Afghanistan very seriously. We have stringent security operating procedures to protect those working for the UK Government on development and reconstruction in Afghanistan. The UK's military contribution to the NATO International Security Assistance Force is also helping to improve security for the wider reconstruction effort, although many challenges remain in some provinces.

The Earl of Sandwich: My Lords, I thank the noble Baroness for that Answer. NATO is about to send several thousand troops to Afghanistan who will face considerable resistance and pockets of terrorism as they move further south of Kandahar. Does NATO still have a peacekeeping mandate as distinct from that of the coalition forces? Does she agree with the aid agencies that it would be better for our soldiers to back up the local police and army and the other services rather than get directly involved in humanitarian work?

Baroness Amos: My Lords, the purpose of NATO's expansion is to secure peace and to assist the process in terms of stability and security. As the House knows, we absolutely recognise that as ISAF has expanded in Afghanistan from the north through to the south the security situation is extraordinarily fragile. That remains a cause of concern. On the humanitarian effort, as the noble Earl will know, in the establishment of the provincial reconstruction teams we have sought to bring together diplomatic personnel, development personnel and security personnel to work together in particular areas of the country to enable us to move from a humanitarian effort to a reconstruction effort.

Lord Elton: My Lords, is it not the case that each of the several national components of the NATO force at present in Afghanistan has different rules of engagement? Does that not enormously impede inter-co-operation? What is being done to standardise rules of engagement?

Baroness Amos: My Lords, I am not aware of any instances where the way in which the ISAF forces have worked has been impeded as a result of the fact that the forces come from different countries. The noble Lord will know that we do not comment on rules of engagement. If he is aware of particular concerns about how the forces operate, I would be pleased to hear about them.

Lord Garden: My Lords, the Defence Select Committee took evidence yesterday on Afghanistan and MoD officials made it clear that there was still some way to go in NATO before there is any agreement on force generation for this new enlarged task in the south and, later, in the east. What representations are the British Government making on these force-generation proposals to ensure that the protection of NGOs and DfID-type aid assets is considered a sufficient priority rather than the counter-terrorist activities?

Baroness Amos: My Lords, I return to the Answer that I gave to the noble Earl. UK forces have been deployed to Afghanistan for peacekeeping work and to ensure a secure environment. I know that the US ambassador to NATO has commented on counter-terrorism issues. However, that is not the basis on which we are deploying in Afghanistan. On the security and protection of NGOs and our own staff, we take full responsibility for the protection of our staff: there is induction training and a huge amount of work is done with them not only before they go out to Afghanistan but while they are there. We also work with the NGOs operating in Afghanistan, giving them whatever advice and information we can about threat levels in addition to access to induction programmes.

Lord Tomlinson: My Lords, does my noble friend agree that the proportion of the gross national product of Afghanistan generated by drugs now exceeds 50 per cent and is rising and that, until that is under control, there will be continual problems with development and reconstruction, however it is organised?

Baroness Amos: My Lords, I am not sure that the figure cited by my noble friend is entirely accurate. The latest figures that I saw showed that the percentage of area given over to poppy production had decreased. However, although the area was smaller, the quantity produced had not changed much because of an increase in the quality of what was produced. So I think that the figure has stayed about the same. My noble friend is absolutely right that this is something that we, with the Government of Afghanistan, must get under control. We are working with them particularly on providing alternative livelihoods, but that will take some time to establish.

Lord Chidgey: My Lords, I am sure that the noble Baroness will be aware of the concern that has been expressed about our international partners honouring their commitments to the new NATO force that is to take the lead in Afghanistan. Can she assure the House that if the Dutch, for example, do not fulfil their commitment as promised, our forces, which cannot make good that shortfall, will not be expected to engage in mission creep, which would expose our forces to dangers that they would not normally be expected to face if the force was properly organised and resourced?

Baroness Amos: My Lords, noble Lords will know that, before any deployment is made, a Statement will be made to both Houses. We do not in any way anticipate mission creep.

Baroness D'Souza: My Lords, the legacy of impunity in Afghanistan, whereby former warlords and even criminals have gained democratic legitimacy at the elections, is much against majority public opinion. A recent survey by the Independent Human Rights Commission of that country revealed that more than 90 per cent of those canvassed want justice for crimes of the past. What specific steps are the UK Government taking to promote proper accountability for past crimes?

Baroness Amos: My Lords, I am afraid that I am not aware of any specific work that we have done in that area. I will look into the matter and write to the noble Baroness if we have done any work there.

Baroness Rawlings: My Lords, I declare an interest as a patron of the mother and child healthcare clinics in Afghanistan for many years. I am deeply concerned by Afghanistan being buffeted recently by more suicide bombings. What plans do Her Majesty's Government have to protect these worthwhile bodies?

Baroness Amos: My Lords, I take it that the noble Baroness is asking a specific question about NGOs operating in Afghanistan. Of course, responsibility for the protection of NGO staff rests with the NGOs themselves. However, we work with the NGOs to alert them to the security situation and security threat, and they have access to induction training and other forms of support from our development teams. In addition, our security forces' work to secure the environment on the ground is helpful in creating the kind of environment in which the NGOs can operate.

Lord Anderson of Swansea: My Lords, there would be a legitimate concern if a disproportionate part of the burden in the more difficult areas were to fall on our own troops. What is the Government's latest understanding in respect of the contribution of the Dutch forces?

Baroness Amos: My Lords, there was a unanimous decision by the Dutch Cabinet in December and the issue is now being put to the Dutch Parliament, which has not yet given a decision.

Wind Energy

Lord Tebbit: asked Her Majesty's Government:
	At what percentage of their maximum output wind-powered electrical generators were working during the cold spells in November and December 2005.

Lord Sainsbury of Turville: My Lords, the Government do not have information on the load factor of wind-powered electrical generators during the recent cold spells. Data on the generation of wind from the largest wind farm operations during November and December will be available in early March but will cover only the whole of each calendar month and not the cold spells. However, a report from the Environmental Change Institute of the University of Oxford, on behalf of the DTI, found that wind power delivers around twice as much electricity in winter as in summer.

Lord Tebbit: My Lords, is the Minister aware that frequently when I ask Questions which are embarrassing to Her Majesty's Government the reply is "We don't have the statistics" or "We don't collect the statistics" or "We don't know"? Is the Minister aware that—although I understand that in some parts of my party now there is some sympathy for things being wind-driven—common sense tells us that, in those periods of cold weather when there is no wind, these generators deliver absolutely no power? Does that not make them rather like an umbrella that will open only when it is not raining?

Lord Sainsbury of Turville: My Lords, I am disappointed as a whole with the noble Lord's Question. Now that the Conservative Party has discovered the environment and that Mr Zak Goldsmith—that enemy of nuclear power—is advising the Conservative Party, we would expect a better understanding of the economics of wind turbines from the noble Lord. In spite of what he terms common sense, the situation is that wind turbines produce more energy during cold spells and the winter, and they produce more energy during the day rather than the night. So in that context, they work rather well.

Lord Redesdale: My Lords, now that the Leader of the Opposition in another place has switched to a green energy supplier, is the Minister looking forward to almost universal support for wind power from all three major parties? Of course, I exempt the noble Lord, Lord Tebbit, from that generalisation. If that is the case, how do the Government plan to produce more wind power?

Lord Sainsbury of Turville: My Lords, we have covered this subject innumerable times; what we should be debating is the mix of energy sources. A reliance on a single energy source is a great mistake and a balanced approach is right. The interesting question for the Conservative Party, with Mr Zak Goldsmith so totally against nuclear energy, is what its final decision will be on this issue; it has attacked us on that for a year now.

Lord Jenkin of Roding: My Lords, the noble Lord will recognise that I have pressed the issue of connection and transmission from remote renewable sources for some time. The noble Lord will also remember that he agreed with me on "no transmission, no finance, no offshore wind". Who will pay for the offshore transmission lines that might lead from transmission sites far offshore, such as the outer isles, to the main centres of consumption?

Lord Sainsbury of Turville: My Lords, in response to a previous Question I covered in great detail how we are looking at the breakdown. As I recall, there are three possibilities for what the legislation will say. I cannot remember the exact details, but I will write to the noble Lord telling him what the Answer was on that occasion.

Lord Peyton of Yeovil: My Lords, we can all understand the disappointment of Ministers in Defra and the DTI that the winds do not always obey them; I agree that that seems unnatural. Does the Minister think that the time has now come to take a serious look at the nuclear alternative? It is no good him bleating any longer about keeping the option open. The doors are all shutting in their faces.

Lord Sainsbury of Turville: My Lords, as the House well knows we are holding an energy review. We have made it clear that one of the options will be the nuclear option and that it will be very seriously considered in that review.
	I cannot let the noble Lord get away with his extraordinary remarks about wind turbines. They do experience the problem of intermittency, but that is the case with every source of energy. In this country the load factor on wind is around 29 per cent, but we should remember that the load factor achieved on conventional thermal stations is between 39 and 50 per cent. No power stations operate with a load factor of 100 per cent. All energy sources have to have some kind of spinning reserve to provide back-up.

Lord Vinson: My Lords, is the noble Lord aware that in reply to an earlier Parliamentary Question of mine the power factor of wind turbines during the year 2004 was 26.1 per cent; that is, well under a third, which is the average world output? Does he agree that this is an inherently expensive and inefficient form of electricity generation which may make people feel good, but does not do an awful lot of good?

Lord Sainsbury of Turville: No, my Lords, I totally disagree. You have to drop to a load factor of around 22 per cent. Above that the supply begins to become economic, so the figures we are achieving are perfectly satisfactory. I also remind the noble Lord that we are talking about not the period of operation but the load factor and that the load factor is the amount of total capacity that an energy source could produce during a given period. Wind turbines are in fact operating on average for about 80 per cent of the time.

Baroness Miller of Hendon: My Lords—

Lord Ezra: My Lords, the noble Lord referred to the need to achieve a proper mix of energy sources, particularly in relation to electricity generation. Can he give an assurance that in the forthcoming energy review, adequate attention will be paid to the need for a back-up to wind power as it increases its proportion in order to achieve that effective mix?

Lord Sainsbury of Turville: My Lords, the question of intermittency between different sources of energy is one of the factors that must be taken into account. But, as I have pointed out, it is an issue with all energy sources.

Anti-social Behaviour Orders

Lord Greaves: asked Her Majesty's Government:
	Whether they will put forward proposals to restrict the circumstances in which anti-social behaviour orders can be granted.

Lord Goldsmith: My Lords, no. The circumstances in which a court grants an anti-social behaviour order are already clearly set out in statute. Such an order can be made where the defendant has behaved in an anti-social manner: behaviour that caused or was likely to cause harassment, alarm or distress; and that an order is necessary for the protection of persons from further anti-social behaviour. The position is reinforced by decisions of higher courts, which have set out clear guidance on how such orders should be drafted and to ensure that they are proportionate to the legitimate aim of protecting the community from further abuse.

Lord Greaves: My Lords, I thank the Attorney-General for that Answer. Is he aware of the lady in Aberystwyth who, after several attempts to take her own life, has been given an ASBO which bans her from walking on the beach or going into the sea? That case follows on at least one other last year, when a lady in Bath was banned from jumping into canals and rivers or on to railway lines. Do the Government really think that if people are intent on taking their own lives in such tragic circumstances, serving an anti-social behaviour order on them is the best way to help?

Lord Goldsmith: My Lords, I do not know about those two particular cases. I am always happy to look at cases if enough details are sent to us so that we can examine them. But, of course, the orders are made by the courts; it is their decision whether an order should be made. It is often forgotten that anti-social behaviour orders are often a very important way of getting urgent intervention to people who are in need of help which otherwise they would not get. I have a host of cases in my briefing; for example, of young people against whom anti-social behaviour orders were made whose lives have been turned around because of the intervention by social services and others which has come about as the order has been made.

Lord Howarth of Newport: My Lords, does my noble and learned friend agree that ASBOs have been a shaft of light for people afflicted by persistent anti-social behaviour in their neighbourhoods? While of course common sense must be applied in the issuance of ASBOs and they should not be available casually, does he further agree that when ASBOs have been handed down they should be enforced unfailingly and that there should be severe penalties for breaches of these orders?

Lord Goldsmith: My Lords, I agree with both the points made by my noble friend. The evidence is clear that people believe their quality of life has been significantly improved where appropriate anti-social behaviour orders have been made. The Home Affairs Committee in another place recently made clear its view that anti-social behaviour orders have helped. They are only a part of the overall approach to helping with quality of life problems and dealing with the nuisance and harassment that people suffer in their communities. I also agree that where orders are made they need to be enforced.

Viscount Bridgeman: My Lords, the Attorney-General will be aware that the number of ASBOs per head of population varies among different authorities by as much as 90 per cent. In view of the potentially serious penalties for breaches of ASBOs, will the Government take steps to follow the lead of, for example, Camden, where there is a procedure for a number of preliminary cautionary steps to be followed before an ASBO is applied for?

Lord Goldsmith: My Lords, the Home Office gives guidance as to the steps which ought to be taken. I know that local authorities, in partnership with other agencies, discuss and debate what procedures ought to be in place and I am sure that they look to the examples of particular authorities to see whether they work. Other authorities will find that they have different problems to deal with and that different responses are appropriate.

Lord Laming: My Lords, following on from the previous question, does the noble and learned Lord agree that local authorities and voluntary organisations need to be encouraged to develop new and more constructive ways to engage with those young people who feel alienated from our society and behave in destructive ways, to themselves as well as to others?

Lord Goldsmith: My Lords, I agree with the noble Lord. Of course, the Respect Action Plan, which was launched last week, indicates the range of measures which the Government hope will be taken—including by authorities, which will be helped by the Government to do so—in a number of areas. A very important area is how to divert young people, through sport, culture, the arts and other programmes, from causing trouble and being a problem.

Lord Soley: My Lords, can the Attorney-General confirm that one of the great advantages of ASBOs is that they give a great deal of flexibility to local courts for what are very often local problems? If we try to over-centralise and over-control on that, we will remove one of the great assets that they bring to local communities.

Lord Goldsmith: My Lords, I agree with my noble friend. In the past we perhaps concentrated a great deal on the most serious offences and did not concentrate enough on the offences which affect far more people ultimately than the most serious offences do. My noble friend is absolutely right that flexibility to respond to local needs is important, and the Government believe in working in partnership with local agencies and authorities to achieve that end.

Lord Woolf: My Lords, does the noble and learned Lord agree that, in relation to the enforcement of ASBOs—that is, dealing with the breaches—it is very important that the response is proportionate to what was done originally to justify the ASBO and the nature of the conduct which is said to be the breach? Is this an area where perhaps, in due course, the Sentencing Guidelines Council might give assistance?

Lord Goldsmith: My Lords, the noble and learned Lord will know better than I do. I believe that the Sentencing Guidelines Council is looking at this issue. If not, I agree that it ought to do so. Of course, the decision as to what the sanction should be is for the courts to determine. But, at the same time—I wonder whether the noble and learned Lord would agree; I suspect that he would—respect for the court's order is also extremely important. So, even though the order was originally imposed for conduct which might not of itself have resulted in imprisonment, not respecting an order which has been imposed by the court may well justify the court in now saying that custody is the only step to take.

Lord Faulkner of Worcester: My Lords, does my noble and learned friend agree that one of the most welcome features of the new policy on prostitution announced by the Home Office yesterday is the emphasis on encouraging prostitutes to seek treatment for drug addiction and to seek help with leaving the sex industry? That being so, will he confirm that one of the consequences will be that fewer ASBOs will be served on prostitutes in future, which I think most people in the industry—I mean, most people in society—recognise is an inappropriate way of dealing with the problem?

Lord Goldsmith: My Lords, I haven't a clue, but I am very happy to take advice and to write to my noble friend with a better answer than the one I have just given.

Company Law Reform Bill [HL]

Lord Sainsbury of Turville: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That it be an instruction to the Grand Committee to which the Company Law Reform Bill [HL] has been committed that they consider the Bill in the following order:
	Clauses 1 to 234
	Schedule 1
	Clauses 235 to 623
	Schedule 2
	Clauses 624 to 650
	Schedule 3
	Clauses 651 to 733
	Schedule 4
	Clauses 734 to 750
	Schedules 5 to 7
	Clauses 751 to 761
	Schedule 8
	Clauses 762 to 767
	Schedule 9
	Clauses 768 to 814
	Schedule 10
	Clauses 815 to 817
	Schedule 11
	Clauses 818 to 839
	Schedule 12
	Clauses 840 to 848
	Schedule 13
	Clauses 849 to 860
	Schedule 14
	Clauses 861 to 881
	Schedule 15
	Clauses 882 to 885.—(Lord Sainsbury of Turville.)

On Question, Motion agreed to.

Commons Bill [HL]

Lord Grocott: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Commons Bill, have consented to place their Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Lord Livsey of Talgarth: moved Amendment No. 1:
	Page 2, line 41, at end insert—
	"(4) There shall be a duty on the Secretary of State and the Minister in the National Assembly for Wales to fund the costs of commons registration authorities."

Lord Livsey of Talgarth: My Lords, the amendment addresses the need to persuade the Secretary of State and the Minister in the Welsh Assembly Government to fund the administration costs of commons registration authorities. I tabled this amendment because there is great concern among commons registration authorities—that is, in the local authorities—that this legislation will create a considerable amount of work. The work will include computerised mapping, the translation to computers of maps from 1905, which, in some local authorities, mostly demarcate the well known boundaries of commons in their locality. It is painstaking work that requires a great deal of accuracy. The level of human resources needed to carry out the time-consuming work of implementing electronic registers—it is certainly not required of commons registration authorities in all local authorities—is expensive. The legislation must be effective and effectively run. Our question is whether the Government want the legislation to be successful. It will not be unless resources are adequate to cover a massive land area of England and Wales—in the area that I come from, one-third of the land area.
	The subject was raised in Committee and, as I am sure the Minister knows, in a meeting between commons registration authorities and Defra in the first half of 2005, in Cheltenham. The information from that meeting was that around £100,000 would be available. In the comments made to me, given the magnitude of the task that I described, that sum was felt to be wholly inadequate to meet the job that the commons registration authorities will have as a result of the legislation. I think that I have made the point very clearly on this amendment; therefore, I beg to move.

The Earl of Caithness: My Lords, should the Minister in his benevolence decide that he accepts this amendment, I hope that he will explain to the House and to everyone outside on what justification the taxpayer should have to fork out yet again to help the farmers to set up something that might be in their own interests.

Lord Williams of Elvel: My Lords, this matter was discussed in Committee, as the noble Lord, Lord Livsey, said, and I thought that we had got through that discussion, so I hope that the Minister will resist the amendment—on the grounds, as the noble Earl, Lord Caithness, said, that this matter should be resolved by those interested in the business and not at the expense of the taxpayer or the council tax payer.

Baroness Byford: My Lords, I have sympathy with the amendment because whether—following on from the comments of the noble Lord, Lord Williams of Elvel—it is the taxpayer in paying central taxes or us paying taxes at a local level, the cost must be met by someone. The matter was raised at earlier stages of consideration, and it was suggested to the noble Lord that he put it to a vote at that time, so I understand why he has come back with it.
	This is an important point; the process will cost money and the Government know that it will cost money. In the response that I had on Report the noble Baroness, Lady Farrington, said that the funding,
	"will . . . be provided, at least initially, on a targeted basis".—[Official Report, 28/11/05; col. 58.]
	Have the Government given any more thought to that? Have they decided how it will be targeted, or will that be left to each individual authority to decide when they bring it forward? No real assurance was given—and I do not believe that we have received a follow-up letter—on what the Government have in mind about how it would be organised.
	The figure of £100,000 is fairly near what was quoted; if you divide that among the various local authorities, it is peanuts in certain areas—and obviously not applicable in others. Although the noble Lord had a slightly rough ride on Report, this question should be answered, and at this stage we have not had it answered. I hope that the Minister will be able to do that.

Lord Bach: My Lords, the amendment would require the Government to fund the costs of commons registration authorities in meeting the additional burdens imposed by Part 1. Our position on funding the costs of Part 1 is quite clear, but let me briefly repeat our case.
	The Government are committed to funding new burdens placed on local authorities. So it is that local authorities will be provided with funding from the Government for any new burdens arising under this Bill, including those relating to updating the registers, in so far as they are not met by funding from other sources, such as fees. Funding for Welsh local authorities will of course be a matter for the National Assembly.
	When the Bill merely retains existing duties on commons registration authorities, arising under the Commons Registration Act 1965, we will not be providing additional funding. In particular, that includes the requirement on authorities to keep commons registers. But Defra will provide additional funding to authorities for new or enhanced duties that arise from the Bill.
	Once the registers are up to date, it will be incumbent on authorities and those with an interest in common land to fulfil their statutory responsibilities. People will generally need to pay fees for amendments to the registers, and authorities must keep the registers up to date. Funding will not be provided for those activities that are funded through fees, nor for applications to register new town or village greens which are already funded other than to the extent that new regulations may place new burdens on registration authorities. Where fees are waived or reduced in the public interest, then that too will need to be taken into account.
	The costs of bringing the registers up to date are expected to vary greatly between local authorities, but the overall costs are not expected to be high. The regulatory impact assessment contains estimates of new costs and copies have been placed in the Library of the House. The assessment will be updated in the usual way at Royal Assent.
	We expect to roll out the implementation of Part 1 by beginning with a pilot scheme in a small number of registration authority areas. The identification of those pilot areas, and the amount of the required funding, will be considered as part of that pilot programme and in association with the Local Government Association.
	We propose to target resources initially, so that additional funding hits the mark. The pilot programme will also enable us to refine the question of costs, and seek agreement on a formula which can be applied across English commons registration authorities.
	Finally, we will also be working with registration authorities over the months ahead to establish the new association of commons registration officers on a sound footing. That will provide an important medium for communication between officers, Defra and the Welsh Assembly Government, and I am pleased to report that there is already real enthusiasm among registration officers to take this project forward. I see a valuable role for the association in helping us to implement the Bill in a practical and cost-effective manner.
	I was asked why the taxpayer should have to pay. The Bill reflects the fact that there is a public interest in the management of common land and in ensuring that the registers are brought up to date. As I say, the cost arising from any new aspects of the Bill will be met from both user fees and public funding.

Lord Tyler: My Lords, I am very grateful to the Minister. Before he sits down, will he indicate whether he supports the thesis advanced by the noble Earl, Lord Caithness, that only those who benefit from a statutory duty undertaken by a local authority should contribute to the cost of carrying out that duty? That would imply, of course, that only old people should pay for old people's services and that only those with children should pay for education.

Lord Bach: My Lords, I certainly do not want to get too philosophical today, but I think that the final thing that I said answers that question: the Bill reflects the fact that there is a public interest in the management of common land, and that is how we justify paying for new things that the registration authority has to do out of public funds.

Lord Livsey of Talgarth: My Lords, I thank the Minister for that response. I am sure that the amendment will be noted in the other place. However, the Minister's response, which referred to new burdens and existing ones which originate in the 1965 Act, needs to be quantified. I was very pleased to hear the Minister address the question of pursuing pilot areas and that there will be a review. I trust that, in looking at the pilot areas and recording what goes on, a very clear definition of new burdens and existing ones will emerge, and that that will assist Defra and the Welsh Assembly Government to decide what level of funding is appropriate given the new burdens that will result from this legislation.
	I was very pleased to hear the Minister refer to the association of commons registration officers. There is enthusiasm for that association and I am sure that it will produce greater cohesion among different commons registration authorities, which vary in their practices and their effectiveness. I hope that that measure will improve the situation over time.
	In view of what the Minister has said, particularly that the system will be piloted—I would be very interested indeed to see the outcome of that—I beg leave to withdraw Amendment No. 1.

Amendment, by leave, withdrawn.

Lord Livsey of Talgarth: moved Amendment No. 2:
	After Clause 4, insert the following new clause—
	"COMMONS ADJUDICATION
	(1) There shall be a body of adjudicators known as Commons Inspectors.
	(2) The Secretary of State shall appoint—
	(a) persons who have a 7 year legal qualification within the meaning of section 71 of the Courts and Legal Services Act 1990 (c. 41) (judicial appointments); and
	(b) persons with such other expertise as he considers appropriate,
	to be Commons Inspectors.
	(3) The Commons Inspectors shall undertake the functions of the Commons Commissioners established under the Commons Registration Act 1965 (c. 64).
	(4) The functions of the Commons Inspectors shall also include—
	(a) vesting unclaimed common land;
	(b) conducting town and village green inquiries;
	(c) resolving problems of amendments to commons registers.
	(5) The Secretary of State shall confer such other functions upon the Commons Inspectors as he considers appropriate.
	(6) The Secretary of State shall pay to the Commons Inspectors such fees, travelling allowances and other allowances as he may determine."

Lord Livsey of Talgarth: My Lords, Amendment No. 2 was debated on Report. Before I go any further, I thank the Minister for his letters on this, and in particular I thank him for allowing in his amendment, which is grouped with this one, regulations to be drawn up in the schedule that will indicate that there will be some basis for appointing people to adjudicate on many of the difficulties that accrue from registration of commons and that area.
	It is important to compare Amendment No. 2 with the Minister's Amendments Nos. 12 and 13 and the two different approaches. The commons adjudication body under my amendment would have people with legal qualifications, as noble Lords can read in my proposed subsection (2). I will refer to that shortly. The main difference between this amendment and that tabled on Report is proposed subsection (4):
	"The functions of the Commons Inspectors shall also include . . . vesting unclaimed common land . . . conducting town and village green inquiries . . . resolving problems of amendments to commons registers".
	The amendment would apply to Part 1. There are issues on which I have sought legal advice. In comparison, government Amendments Nos. 12 and 13 relate to Clauses 16 and 24. Clause 24 refers to,
	"sections 6 to 9, 12 and 13",
	which are all in Part 1. It also refers to the amendment of registers and applications. It covers the creation of rights of common, variation, apportionment, severance, transfers, surrender and extinguishment. It also addresses the ability of persons to discharge functions of a commons registration authority, all under Part 1, wholly with the registration of common rights—that is important.
	However, there are other matters relating to inspection outside Part 1 that must be addressed and which require legal expertise. In our proposed subsection (4), the amendment of registers is addressed in paragraph (c), but the missing link, especially in comparison with the commons commissioners, which were created in the 1965 Act, is:
	"vesting unclaimed common land . . . conducting town and village green inquiries".
	Both those are outside the scope of government Amendments Nos. 12 and 13; none the less they are very necessary functions for legally qualified commons inspectors. In our view, it is essential that they have legal qualifications in the area of vesting unclaimed common land and conducting town and village green inquiries. Can the Minister prove that his amendment, under regulations, will address subsections (4)(a) and (4)(b) of my amendment, as far as functions are concerned?
	I wish to make some other points, but I will have that opportunity in response to what the Minister says, so I beg to move.

Baroness Byford: My Lords, I thank the noble Lord for raising this matter and I have a couple of questions. In an earlier debate, the Minister in response said that the independent persons who were taking forward this work would have worked on other parts of the Bill. Having re-read the Official Report, my understanding of what he said was that some would have legal expertise and some would have other attributes, not necessarily legal ones. Have the Government given any more thought to that?
	Also, my understanding from the previous debate was that that would come forward in the form of regulation and not in the Bill. The noble Baroness who will respond will remember the concern expressed on that issue by the noble Countess, Lady Mar, who is unable to be here today because she is not well—we all send our wishes that she is better soon—and my noble friend Lord Jopling. Have the Government given any more thought to that, too?

Lord Greaves: My Lords, I support my noble friend's amendment and I wish to address the two government amendments in this group, which have not yet been spoken to.
	Amendments Nos. 12 and 13, as my noble friend said, make it much clearer that there will be a core of inspectors or such people who will be trained and have expertise in commons registration. That is welcome and, while the Government's new proposals do not go as far as my noble friend and I would like, they are a step forward. Amendment No. 13 performs another useful function. When we were debating Clause 24 in Committee and what will now become Clause 24(6), I was concerned that the powers were too all-embracing and would effectively allow the appropriate national authority or the Government to close down the commons registration authority and take over all its functions. I was assured that that was not the case and that could not be read into it.
	The new wording has clarified the issue and certainly satisfies me that no one in future can look at this matter and think that it would have the unfortunate effect that I suspected. The amendment's more felicitous wording is much clearer and for that small reason I welcome it.

Baroness Farrington of Ribbleton: My Lords, I, too, send good wishes to the noble Countess, Lady Mar, for a speedy recovery, as will the whole House.
	I shall first speak to government Amendments Nos. 12 and 13. During earlier stages of the Bill, we had a number of debates about the role of the commons commissioners in the implementation of the Bill.
	In Grand Committee, my noble friend Lord Bach said:
	"We think it unnecessary to retain the commons commissioners as a dedicated tribunal as before, but we also expect to appoint persons of similar experience to decide some cases which arise under Part 1".—[Official Report, 25/10/05; col. GC 276.]
	Amendment No. 13 enables us to appoint and retain persons of experience to form a panel—I will go no further than to call it a panel at this stage—and we will of course consult at a later date on whether regulations might confer a particular name on the panel. Once suitable people have been appointed to the panel, the amendment enables its members to be appointed to discharge the functions of a commons registration authority in any particular case.
	In answer to the noble Lord, Lord Livsey, it is entirely possible under the government amendments that inquiries into the registration of greens could be referred to an inspector, appointed from a panel. That could happen, for example, where the registration authority required an independent person to deal with a very complex application. I hope that that gives the noble Lord and other noble Lords a degree of reassurance.
	Paragraph (b) in Amendment No. 13 leaves open who may do the appointing. For example, it may be possible for a registration authority to select a panel member when it identifies a conflict of interest which would prevent it determining an application itself. Alternatively, there may be an administrative unit attached to the panel which will assign panel members on demand. I hope that your Lordships will agree that these matters are also right for consultation at a later date.
	As the noble Lord, Lord Greaves, recognised, Amendment No. 12 retains the existing powers for the national authority to appoint persons to discharge any of its own functions in relation to orders for deregistration and exchange under Clauses 16 and 17. The amendment does not require individual appointments to be made from a panel, but regulations could nevertheless be made that would enable appointments from a panel. We believe it sensible to retain more streamlined provision in relation to the national authority's functions, because there is the possibility that either the Secretary of State or the National Assembly may wish to delegate their decision-making powers to a separate body entirely.
	As your Lordships have recognised, Amendment No. 2 would go a little further than the government amendments to which I am speaking. However, as I have heard, noble Lords acknowledge that we have tried to meet them halfway. The noble Lord, Lord Livsey, has great regard for the work of the commons commissioners, and I respect that. We know that the commissioners' work is valued by many commoners, because of their experience and independence. That is precisely why we have tabled the government amendments: to ensure that we have the powers that we shall need to set up a panel of independent, experienced inspectors to advise on or determine applications that are too complex or inappropriate for the commons registration authority to deal with.
	The noble Baroness, Lady Byford, asked whether lawyers could be appointed under the government amendments. Of course, the national authority would have discretion to appoint persons with a wide range of qualifications and experience, including lawyers where appropriate. We made it plain on Report that we would need to establish a panel, so to that extent we are in great agreement. We believe it appropriate that we should do that by regulations. It should not surprise noble Lords that we believe that it is unnecessary to stipulate in the Bill the kind of qualifications required by commons inspectors or the functions that they should be assigned.
	Comparison has been made—by the noble Lord, Lord Greaves, I think—with the Commons Registration Act 1965, which sets out in some detail the functions and status of commons commissioners. To a degree, we are bound by the inflexibility of that Act to the present day. We do not wish to repeat the mistakes that were made due to that inflexibility, so I hope that noble Lords will support the Government's amendments to Clause 24 when we come to them.
	I hope that your Lordships will forgive me a small aside. I am not totally surprised that, if the noble Lord, Lord Livsey, sought the advice of lawyers, he was told that lawyers were probably the best and even possibly the only people who could do the job.

Baroness Byford: My Lords, will just one panel cover the whole of England? How do the Government view this panel operating? Alternatively, will there be one panel per region? It would help the House to know that.

Baroness Farrington of Ribbleton: My Lords, there would be one panel, from which people could be drawn. Obviously, they could move, but I think that we all know that, in practice, people are drawn into the region of which they have their greatest knowledge. However, as I said, there would be one panel.

Lord Livsey of Talgarth: My Lords, I thank the Minister for that response. Of course we accept what she says about the panel and the way that it would function. But there are important points of principle and obviously we beg to differ on whether this matter should be made statutory or just put in regulations. One critical factor is the independence of the adjudicators and their ability to look at this issue in a focused and objective way. I note what the Minister said about lawyers. I do not have a remit for them but I listen to what they say and try to evaluate it.
	Some issues of principle should be considered. In particular, Part 1 deals with problems of registration and correction and matters of that kind. But in the case, for example, of the vesting of unclaimed common land, we are not talking about grazing rights but about ownership. Therefore, strictly speaking, that is not part of Part 1. I merely put that to the Minister because the commons commissioners could operate over a very wide field. At present, it is a function of the commons commissioners, but they are being wiped out as a result of the cancellation of the Commons Registration Act 1965.
	So far as concerns subsection (4)(b) in my amendment, about 35 to 40 town and village green inquiries go on every year. They are run by local authorities and, if the Bill stands as it is, sometimes expensive private barristers will have to be engaged and decisions taken, often because there will be no statutory force. In fact, in strict terms of law, I am informed that this measure will not stand up at all well, as apparently will be the case in terms of the early part of the amendment of which I spoke.
	So the matter about which I have just spoken—that is, the fact that there is some doubt—will be corrected by the insertion of subsection (4)(b) in our amendment as legally qualified inspectors would conduct the inquiries and would come to conclusions which, I am informed, might stand up better than the way that the Bill is drafted at present. I am sure that the Minister will have taken note of that and, indeed, as she says—and I agree—the Government have come at least halfway. I am sure that people will have noted the contents of this debate and, in those terms, I wish—

Lord Williams of Elvel: My Lords, before the noble Lord decides what he wishes to do with this amendment, he said that it was a matter of principle. If it is a matter of principle, then presumably—we are, after all, at Third Reading—he will ask the opinion of the House.

Lord Livsey of Talgarth: My Lords, I know the noble Lord quite well and I think that he makes an important point. But I am sure he will agree that at Third Reading one also has to exercise a degree of judgment and, in that context, I beg leave to withdraw the amendment.

Lord Brabazon of Tara: My Lords, is it your Lordships' pleasure that this amendment be withdrawn?

Lord Williams of Elvel: My Lords, no.

Lord Brabazon of Tara: My Lords, the Question is that this amendment be agreed to. As many as are of that opinion will say, "Content". To the contrary, "Not-Content".

Noble Lords: Not content.

Lord Brabazon of Tara: The Not-Contents have it.
	On Question, amendment negatived.

Clause 9 [Severance]:

Lord Bach: moved Amendment No. 3:
	Page 5, line 9, at end insert—
	"( ) where the severance is authorised by or under Schedule (Authorised severance); or"

Lord Bach: My Lords, this group contains a whole series of government amendments. I shall speak to and move Amendment No. 3 and speak to Amendments Nos. 4, 5, 6, 10, 11, 25, 26, 27 and 28. Then, with the leave of the House, I shall sit down so that noble Lords can speak to their amendments in the group and then I shall attempt to respond.
	These amendments give effect to our undertaking on Report to bring forward amendments to enable the Secretary of State to prescribe for permanent severance of rights of common. First, I should explain the structure of the amendments. In seeking to add to Clause 9 to provide for permanent severance by order, we have run up against the capacity of that clause to absorb further provisions. I hope noble Lords agree. It already takes up two pages of the Bill and has 16 subsections. We propose the introduction of a new schedule to be placed before the existing Schedule 1 to accommodate the three classes of exception to the prohibition on severance which remains the core purpose of Clause 9.
	Last week, I wrote to noble Lords including an analysis of changes to the text of Clause 9, which I hope has been helpful. I draw attention particularly to the new schedule, which is contained in Amendment No. 28. Proposed new paragraph 1 now contains the existing exceptions in Clause 9(3) to (7) to enable the severance of rights in favour of Natural England, the Countryside Council for Wales and commons associations, with some minor and consequential drafting amendments.
	On Report, I agreed to consider the then Amendment No. 9, tabled by the noble Lord, Lord Greaves, so that where Natural England or the Countryside Council for Wales gives notice to the landowner and any commons association of its intention to acquire rights of common by severance, that body should have regard to representations received from the bodies to which notice is given. We gave further thought to that matter and our conclusion is that an amendment to impose such a duty would, in effect, be redundant because—I can assure the noble Lord of this—public law inevitably requires those bodies to have regard to any such representations received in response to the notice given. I hope that putting that remark on the record today puts that matter beyond doubt.
	Paragraph 2 of the proposed new schedule repeats the existing provisions in subsections (8) to (11) to confer powers to enable the temporary letting or leasing of rights of common. The only substantive change is that these powers are now to be exercised by order instead of regulation. Paragraph 3 of the proposed new schedule contains our provision enabling permanent severance. It is worth repeating myself on this matter. Noble Lords will know that these amendments follow from the debate on an amendment tabled by the noble Lord, Lord Inglewood, who, again, I am afraid is not well enough to be with us today. We all wish him a speedy recovery. He said that there was merit in enabling some limited provision in legislation for permanent exceptions to the prohibition on severance. In making those remarks I believe he relied heavily on his Cumbrian background. He said that the Bill is,
	"to set the framework for the administration of common land in Britain for the next 40 years",
	and to have such provisions on the statute book,
	"would be a good thing".—[Official Report, 28/11/05; cols. 28–29.]
	In agreeing to bring forward such amendments, I said—and I repeat—that the power would be a reserve power. That remains the basis of our thinking. We do not plan to make many orders under proposed new paragraph 3—indeed we do not plan to make any orders at all—but if these amendments are accepted, the power will be available if circumstances change and a good case can be made for them. Noble Lords will have noted that paragraph 3(4) of the proposed new schedule requires that an order must provide for the consent of the owner of a common to be obtained to any authorised act of permanent severance. I believe that that fulfils the term of the compromise that I signalled on Report. I hope noble Lords accept that. We have had some indication that there may be room to refine the terms of this condition, and we are open to discussion even as the Bill moves to another place. While we may look for a consensus on an alternative form of words, we think it right that this should be the default position in this amendment.
	Proposed new paragraph 3(7) enables an order to provide that a severance may take place only so that the right is transferred to another commoner and that, in such a case, the order may require the severed right to be registered as attached to that commoner's own holding in order for the severance to be effective. That option will be available to the national authority, and picks up a condition which was present in the amendment put forward by the noble Lord, Lord Inglewood. We are simply providing for the possibility, without committing to the particular outcome.
	There are various other government amendments in this group. With the leave of the House, I will not dwell on them. They are essentially paving and consequential amendments and if they raise any particular questions in noble Lords' minds—frankly, I hope they do not—I shall do my best to respond. I beg to move.

Lord Livsey of Talgarth: My Lords, connected with this series of government amendments are our Amendments Nos. 29 to 35. We are particularly anxious that this series of government amendments—we need to make it clear that our amendments amend the government amendments—come under a section in the Bill dealing with the right of common being severed permanently, which also needs to be made clear. We are quite satisfied with sub-paragraph (1) in Amendment No. 28, which indicates that the right of common that,
	"applies . . . on or after the day on which this Schedule comes into force be severed permanently from the land to which it is attached by being transferred on its own to—
	(a) any commons association established for the land".
	We are happy with that, but not with rights of common being severed permanently in sub-paragraph (1)(b) to Natural England, and in sub-paragraph (1)(c) to the Countryside Council for Wales.
	We need to ask why the schedule proposed by the Minister allows the rights of common to be severed permanently to these bodies. Sub-paragraph (1)(a), as I have said, is surely correct, and perhaps would have been better still if it had said "the relevant commons association", because that is probably the right place for rights of common to be transferred to.
	Our consequential amendments therefore seek to remove both Natural England and the Countryside Council for Wales from the Government's new schedule. All evidence points to both Natural England's predecessor and the Countryside Council for Wales obtaining common rights only to, in some cases, extinguish them. That is a significant thing which is happening now, and could happen much more in the future.
	As an agriculturalist, I worry that the economic viability of many hill and upland family farms is dependent on the common rights for grazing on the adjoining common. This is very common in Wales, the south-west, the Pennines and the north of England. An 80 to 150-acre holding, for example, could easily have anything from 250 to 500 ewes on the common. For some rights to be extinguished on that common could easily make some family farm units economically unviable. The subsequent loss of income could be terminal for those agricultural businesses. As a consequence, depopulation could occur as young family members leave the land. That is the road to destroying the social infrastructure of the uplands. I am putting just one side of the argument at the moment, and I shall come to the other side in a minute.
	There may be good environmental reasons why government bodies—that is, Natural England and CCW—would wish to extinguish grazing rights, but that must never be at the cost of families being forced, perhaps inadvertently, to leave the land. In most places, overgrazing is receding and, as we agreed in Committee, undergrazing is a more likely scenario in the next 20 years, particularly with the introduction of single farm payments. Indeed, taking account of the fact that in most of these areas—certainly it is true in Wales—the average age of an upland farmer is 55, such people are not likely to be striving hard to alter their farming systems radically. In these circumstances, the commons association must surely be the best custodian to which to transfer the common rights, as it has a key role in securing the balance of grazing rights in relation to the local community's interests and its economic well-being. It is also very important that the commons association is able to secure a balance of environmental management agreements—very often made with Natural England, as it will be in future, and the Countryside Council for Wales—giving advice which, by agreement, can be carried out without those two bodies having permanently severed grazing rights to do with what they wish.
	Our amendments are constructive to the well-being of the uplands. We do not want to see holdings broken up and farmhouses possibly sold off. That is not in the interest of rural areas.

Earl Peel: My Lords, before I make my few remarks on Amendment No. 28, I should just like to say that the point made by the noble Lord, Lord Livsey, is well made. It would be a tragedy if we saw any of the environmental agencies moving in and acquiring rights at the expense of local farmers. I do not know whether the noble Lord is in receipt of the letter sent by Sir Martin Doughty, the chairman of English Nature, in which he made it clear—and I am sure that he is right—that such circumstances would prevail only in very rare cases when there was an overriding conservation need. I had expressed exactly the same view as the noble Lord. So having seen that correspondence, I feel reasonably happy that that will be the purpose of any intervention by Natural England or CCW.
	I shall speak briefly to Amendment No. 28. The Minister will know that I was extremely concerned about the amendment moved by my noble friend Lord Inglewood on the basis that I thought that it was likely to drive a coach and horses through one of the major pillars of the Bill on the question of severance. However, I think that the whole House, myself included, eventually acknowledged that the noble Lord had a good point. I am truly delighted that a sensible compromise has been reached in order to secure the concerns of my noble friend Lord Inglewood and those of us who were concerned that the amendment would have devastating consequences. I therefore take this opportunity to thank the Minister and his officials for having reached this compromise. We now have something that is really workable and my noble friend's concerns have been dealt with.
	I realise that there is concern in certain quarters that the owner can exercise a veto. But I have always believed that this is essential because on many commons the owner has a very active part in the management. I am afraid that history has shown that where rights have been severed and farmers have acquired disproportionate rights to the size of the land they are farming, considerable environmental degradation can result.
	I welcome the fact that the Minister says that special cases for such severance will occur only in very rare circumstances. I really do believe that we have achieved something which at one stage I thought was impossible: a genuine compromise that meets the wishes of all of us on this very important matter.

Lord Williams of Elvel: My Lords, I have a great deal of sympathy with what the noble Lord, Lord Livsey, says in relation to his Amendment No. 29, which I think we are debating at the moment. I have sympathies simply because, as he rightly points out, the Countryside Council for Wales as an owner of common rights sits untidily in the upland farms of which the noble Lord and I have some knowledge and experience. I cannot speak about Natural England, because I know nothing about it. However, if the Countryside Council for Wales, a statutory advisory body advising the Welsh Assembly Government, suddenly becomes an owner of common rights, how will that fit in with the countryside council roles or indeed the role of Natural England? Are there any guidelines that my noble friend might like to give to the Countryside Council of Wales in the operation of its new obligations?

Lord Tyler: My Lords, I share the concerns of the noble Lord, Lord Williams, and I support the amendments to which my noble friend has referred. I have another problem. I hope that the Minister will be able to address it and clarify the position that would arise if his Amendment No. 28, the new schedule, is passed with the other amendments to Clause 9. Like other members including the noble Earl, Lord Peel, I accept that the Government have gone a long way to meeting the concerns expressed on Report.
	I think that we are in the territory of unintended consequences when it comes to Dartmoor. I hope that the Minister will be able to give some assurances and clarification on that. As I understand it, the way in which the Bill has developed in your Lordships' House means that two matters have been added to the powers of a statutory association in Clause 9, which the Dartmoor Commoners Council does not at present possess. They are the power to veto the admittedly limited severance of a right of common from the land to which it has been historically attached, with which we are concerned in these amendments; and the power to receive and thus own rights so severed, to which reference has already been made.
	I think that the Minister will acknowledge that this Bill owes a great deal to the Dartmoor Commons Act 1985. We have had the benefit, if you like, of a pilot project in one part of the country, and useful lessons have been learnt from it. But the prohibition of severance in that Act, which has applied for 20 years without challenge or any problems arising of which I or the commoners' council are aware, should be taken into account.
	The Bill as it stands would, under Schedule 5, as I understand it, repeal Section 8 of the Dartmoor Commons Act 1985, which would mean, uniquely, that Dartmoor would not have the same powers as we are giving to the new commons associations. That is clearly an extraordinary situation. It really is rather odd that there is a very successful pilot project that everybody on all sides of your Lordships' House recognises as such, on which we are basing the experience for this Bill, and yet we are preventing that particular commoners council from doing the job that we believe others should be doing.
	This grievance is perceived by the council. I understand that it has been notified to the noble Lord's department. I hope that, maybe either today in your Lordships' House or when the Bill goes to the other place, there may be an opportunity to redress it. Clearly, there are different ways that that might be undertaken. It could be dealt with in the new schedule in government Amendment No. 28, which we are now debating. I very much understand the references to regulations, which we are not going to see just yet, but perhaps it can be dealt with in those. There could be a positive reference to the Dartmoor Commons Act 1985 at some point. That would now have to be done in the other place. That Act could be amended in a schedule to the Bill. Clause 9 could include some reference to a commons association to include the Dartmoor Commoners Council. However, it seems to me—although I am no expert and I hope that the Minister will be able to respond positively—that the most practical way to deal with the matter may be under regulation, which would mean that we do not have to deal with it right now.
	I very much hope that the Minister will be able to respond positively and acknowledge the concerns of those who have so effectively used the Dartmoor Act and have therefore provided so much experience and expertise that has so well informed this debate.

The Duke of Montrose: My Lords, first, we thank the Minister for all his co-operation in what he has produced, especially on behalf of my noble friend Lord Inglewood, whose points he took on board with such detailed care.
	On Amendment No. 29, tabled by the noble Lord, Lord Livsey, on the question of which public body should take over, I can see his point that if Natural England or any other body took over a small part of a common and then extinguished the rights, that would be an absolute disaster. If it succeeded in gaining severance of all rights, we might consider whether it should be able to distinguish those rights, but there is a danger of piecemeal severance of a common going to Natural England or some such body.
	To return to the point made by the noble Lord, Lord Tyler, only last night, we received a letter from Professor Mercer, chairman of the Dartmoor Commoners Council. Despite its late arrival, I am sure that noble Lords will appreciate the importance of his contribution. As the noble Lord, Lord Tyler, told the House, Professor Mercer states:
	"the present bill, and the work which led up to it . . . has fed in part from the Dartmoor Commons Act 1985 and our experience since then".
	However, it seems that in changing our attitude to severance, there has been an oversight that he feels that we would want to correct. The letter continues:
	"The repeal of our Section 8 diminishes the protection of the historic process of commons management on Dartmoor, and yet any other common or block of commons will have—provided an association is formed—greater protection under the present Bill. Its association can veto the only exception to general severance in favour of a third party, and can ensure that right grazing levels are sustained by having at its disposal rights to deploy (directly or by lease or license) on the common in question".
	It seems that we have omitted to provide for the fact that Dartmoor will not have an association but retain its council.
	Unfortunately, this letter came to my attention too late for us to table amendments through the usual channels. However, I would be grateful if noble Lords would allow me to read out Professor Mercer's brief suggestions, so that we all have food for thought. Professor Mercer suggests four options:
	"(a) a positive reference to the Dartmoor Commons Act (1985) and its Commoners Council rather than the lone negative implied by repeal, perhaps by a 'miscellaneous' clause or in a schedule which accorded statutory association status to the Council, after all Clause 32.2.e already gives the national authority necessary power over the Council's processes
	(b) amend the 1985 Act, in this Bill's Schedule 4, by inserting in its Schedule 2 Section 1 a sentence applying all the functions and obligations of a statutory Commons Association (2006) to the Council
	(c) apply Clause 9 of this Bill to the 1985 Act with a rider that all references to a commons association should be read as including the Dartmoor Commoners Council
	(d) if it is feasible by Regulation give this Council the powers of a statutory association, and get the minister to commit to that in debate".
	He also says that he would be grateful for our help and that he is asking the noble Lord, Lord Tyler, for his help too, as noble Lords will have heard today.
	The amendments in this group, particularly the amendment moved by the Minister, are a very good example of how the Government are listening, but it seems that they have the capability of listening only by enabling all sorts of things to be done by regulation. So even if we are burying Edward I and his Commons Act 1285, Henry I and his heirs are still rubbing their hands with a certain amount of glee.
	In paragraph 1(2)(a) and (b) of the new schedule proposed in government Amendment No. 28, there is no measure to ensure that persons who wish to sever a right of common have a duty to inform the commons association as well as the owner of the land, although subparagraph (2)(b) perhaps implies that. Is that not required, or is it simply not clear enough to me? On the question of temporary severance and leasing, will the Minister clarify the meaning of the phrase "framed by reference"? Does that mean that the provisions and rules referred to will be constrained by their relevance to particular land or descriptions of land, or to descriptions of persons to whom the rights of common may be leased or licensed? If so, what effect will that have?
	Perhaps this is superfluous, but I wonder whether there is a typing error in paragraph 3(4) of the proposed new schedule. At the end of the first line of the paragraph there seems to be an extra "that". It says that it,
	"must include provision securing that that the owner of any land over which a right of common is exercisable".
	I would be grateful if the Minister would clarify those points.
	{**17**}

Lord Bach: My Lords, I am grateful to noble Lords who have spoken in this debate on the amendments in the name of the noble Lord, Lord Livsey. The noble Lord has tabled a number of amendments to our proposed schedule set out in government Amendment No. 28. I shall deal with the amendments in three groups. Before doing so, I thank noble Lords, particularly the noble Earl, Lord Peel, for his very kind remarks about the compromise that has been achieved and for his praise for the officials behind the Bill. It is not very often in this House or, dare I say, in another place that departmental officials get the praise they deserve. As regards this Bill, they have led Ministers down a path of compromise, which has been appropriate. Particularly on this vexed subject of severance they have played a great part in effecting compromise.

Earl Peel: My Lords, will they create a similar response through the course of the NERC Bill?

Lord Bach: My Lords, we can always live in hope. Amendments Nos. 29, 30 and 31 would remove the power for Natural England and the Countryside Council for Wales to acquire rights of common by severance. These amendments are now old friends. Such was the concern of the House at the powers in the Bill at introduction that we brought forward amendments on Report specifically to constrain the exercise of those powers. Those amendments are now reflected in paragraph 1(2) and (3) of the new schedule and require notice to be given in advance of the powers being used. Effectively, we have introduced a requirement to consult.
	Let me remind the House that the vendor of rights acquired under paragraph 1 must be a willing party. There are no powers in the Bill to require such rights to be sold. Where a sale takes place, the rights will cease to be attached to the land and will instead be held by the commons association, Natural England or the Countryside Council "in gross", although any of these bodies may subsequently reattach the rights to other land under Clause 10. It is not possible under paragraph 1 to sever any part of the land comprising the common or to cause any part of the common to cease to be available for the exercise of rights of common.
	I have often heard arguments that these powers are not needed or will be abused, and that we face problems of under-grazing, not over-grazing. If that is correct—noble Lords will forgive me if I do not sign up to that this afternoon; we have had a friendly exchange about the position over the past few months—then the powers will not be used and commoners have nothing to fear. But if over-grazing does continue to be a problem, we would be foolish to throw out the only tool that can guarantee reduced grazing activity on the common, provided that there are vendors willing to sell.
	In relation to the Countryside Council for Wales and the points put to me by my noble friend, we do not expect the CCW or Natural England to exercise the rights they have acquired and we see no difficulty in reconciling the holding of rights with their statutory functions. Both organisations can and do own land for their statutory purposes. There is nothing incompatible about their owning rights of common. But at the risk of repeating myself, we do not envisage this happening very often. Again, English Nature does not normally acquire rights in order to extinguish them, rather it holds on to them to prevent them being exercised. Where a commoner voluntarily sells his rights, it must be reasonable to assume that he believes the purchase price more than offsets any future loss of income. We believe that that should be a calculation for the commoner to make. It should not be for government to say, "The vendor cannot be trusted to make the decision".
	Amendments Nos. 32, 33 and 34 would effectively remove the powers for commons associations to regulate the temporary letting of rights of common at a local level by making rules for that purpose. We see these powers as enabling local management by the local interests. We are a little surprised that the noble Lord, Lord Livsey, is opposed to that, given that he is himself a great localist. We believe that where a commons association exists, it should have powers to manage the temporary letting of rights rather than having to subscribe to national rules made all those miles away, whether in London or in Cardiff. Paragraph 2(3) specifically provides that local rules are to take precedence over national regulations, a point of particular concern to the noble Baroness, Lady Byford, in Grand Committee. We would resist the amendments.
	Amendment No. 35 takes us to the root of the Government's amendments in this group. It would leave out from government Amendment No. 28 the power to enable the permanent severance of rights by order. I hope that the noble Lord, Lord Livsey, will feel able to support our amendments in this direction. I had hoped that we might achieve support for these compromise measures across the House. Moreover, the first suggestions made by the noble Lord, Lord Inglewood, on this were strongly supported by the Federation of Cumbria Commoners, among others. Let me make one last attempt to reassure the noble Lord that paragraph 3 of the new schedule does not overturn the old order represented by the prohibition on severance in Clause 9, which is the main part of the Bill. That prohibition remains our, and most stakeholders', clear goal. Paragraph 3 is a reserve power only, enabling targeted exceptions after appropriate consultation. Like the noble Lord, Lord Inglewood, we have taken the long view and decided that it would be sensible to have these powers available. That does not mean we intend to use them, and I repeat that we have no plans to do so. If we do, the strong likelihood is that the initiative for an order will come from the commoners themselves. That is only right because the commoners would be those most affected. I am sure the noble Lord would support the making of an order for which the commoners themselves had lobbied.
	There is little I can say today about the defence and support for Dartmoor of the noble Lord, Lord Tyler—which was backed up by the noble Duke—except to acknowledge the success of the Dartmoor Commoners Council and the fact that it has played a part in some of our thinking on the Bill. I do not wish to exaggerate the point—I am sure the noble Lord would not wish to either—but certainly it has been a factor. I can go so far as to say that we will look into the matter, although I cannot give any commitment.
	As always, the noble Duke has been extremely thorough in the way he has examined the amendments because there appears to be an error, with the word "that" appearing twice in paragraph 3(4) of the new schedule. I congratulate him and thank him for his thoroughness.
	Having said that, I am not sure that I can answer his other questions here and now except on the issue of whether there is a requirement for a commons association to be notified of severance of right. A commons association must consent to a severance by virtue, I am advised, of paragraph 1(4). I have spoken to Amendment No. 3, which I have moved.

Lord Williams of Elvel: My Lords, I thought that we were discussing the amendment of the noble Lord, Lord Livsey, Amendment No. 29.

Baroness Lockwood: My Lords, we are discussing at the moment Amendment No. 3.

On Question, amendment agreed to.

Lord Bach: moved Amendments Nos. 4 to 6:
	Page 5, line 10, leave out from "Act" to end of line 20 on page 6.
	Page 6, line 40, leave out "is" and insert "and Schedule (Authorised severance) shall be"
	Page 6, line 40, leave out "regulations under subsection (8)(a)" and insert "an order under paragraph 2 of that Schedule"
	On Question, amendments agreed to.
	Clause 15 [Registration of Greens]:

Baroness Byford: moved Amendment No. 7:
	Page 9, line 2, leave out "the relevant period" and insert "twelve months of the date upon which the landowner posted a notice prohibiting the use of the land for sports and pastimes"

Baroness Byford: My Lords, in moving Amendment No. 7, I shall speak also to Amendment No. 8. This clause will come into force in accordance with the provisions made by order by the appropriate national authority. We are still waiting for some aspects of the Animal Health Act—which we will be discussing later—to come into being on which we will have no influence once this Bill has left the House. There are matters within the Bill which will have a bearing upon our discussions.
	It is possible that the owner of land might decide—perhaps as a consequence of practical experience of the single farm payment—to sell up. As part of the preparation for the sale, he might have to erect a notice clarifying that the use of a particular field is permissive and that permission is now being withdrawn. Under this clause, unless the Secretary of State had already brought it into force, he would then have to wait for five years to complete the sale even though the notice was not put up until after the Bill had become law. This is a little technical but I hope the Minister is following me.
	On the other hand, had the clause already been brought into force, he would have to wait a mere two years. I wonder how many people would consider it reasonable to be required to wait for two years between deciding to sell their house and being able to put up a "For Sale" notice. If this clause is brought into law, any number of farmers whose land now adjoins a conurbation could be faced with that problem.
	The situation is made worse by the recent changes to the common agricultural policy. There are farmers who are faced with a drop in their income sufficient to wipe out a fairly fragile profit, especially if there is any delay in the new single farm payments, which we will no doubt debate on my Question next week. The process of applying to register land as a town or village green is not specified in the Bill, but if it follows the procedure for establishing rights of way, the application will be made considerably in advance of any decision. Moreover, that decision process will involve both the registration authority and those who are making the application. It is quite reasonable to set a limit of 12 months for the filing of an application. That is the thrust of these two amendments.
	Rather like the matter relating to the Dartmoor Commoners Council, another issue was raised with me only yesterday. I apologise to the Minister. I hope that he will not mind my sharing it with the House, even though I understand that it may not be possible to do anything until the Bill passes to the Commons. I hope the House will forgive me for introducing an additional angle to the debate on this part of the Bill.
	The matter is, I think, of great interest to us all. It is not intended to slow up proceedings, but to ensure that all possible areas of debate are covered before we pass our hard work over to the Commons. The much debated Clause 15 has thrown up yet another problem. It has come to my attention that a retrospective effect of Clause 15(6)(a) could be an unintended loophole. This ties in with our amendments. If land had been used for a 20-year period and its use ceased five years before the Act, under Clause 15(6)(a), houses which had already been built would be in line for demolition. I shall describe a situation in which this could apply.
	A building society could have fenced a site on commencement of construction works, with the appropriate planning permission, in 2002, and commenced building work. Under the current law, the development could have been completed. I have been made aware of developments where this is the case. The case of which I am aware was challenged by protesters under existing common law, but the challenge was overturned by a public inquiry conducted by a QC and supported by a High Court ruling. Yet I understand that, under Clause 15(6), both those respected and official rulings could be overturned by an oversight. In spite of its comprehensive defeat, the protest against the development would be renewable under this new legislation. I am sure that that is not what is intended. Those who were against the development would have a window until 2007 to attempt to overturn the development or part of the proposed development. It seems that Defra is aware of this problem. A letter which I believe was dated 10 January 2006—I have unfortunately left my copy in my office—has instructed local councils to withhold planning applications on the assumption that village green applications might be made. Surely this is not the operation of a government department through the usual channels. I also refer the Minister to the recent European Court ruling in the case of Pye v UK 2005, in which an attempt by the Government retrospectively to vary a law was found to contradict European rulings on human rights.
	I apologise to the House for the complexity of the matter, but as it is directly relevant to this part of the Bill, it is important that it is in Hansard. When the matter moves to the Commons, perhaps Ministers and the department will look into it further. I do not expect the Minister to have clear knowledge on the issue. I beg to move.

Lord Renton: My Lords, it is surely significant that at the Third Reading of this important Bill, the Opposition Front Bench—my noble friends Lady Byford and the Duke of Montrose—have moved only three amendments, which are amendments to Clause 15. I think that they are very important.
	As the clause stands, it imposes too long a period before change can be made when change might well need to be made. That would lead to stagnation, which we must avoid. So I warmly support Amendments Nos. 7 and 8. We shall come separately to Amendment No. 9, which is slightly different in that it refers to charity. But I hope that the Government will keep an open mind on the strong case that my noble friend Lady Byford has put.

Baroness Miller of Chilthorne Domer: My Lords, unfortunately, in this instance we cannot support the first amendment to which the noble Baroness spoke; but the perhaps more substantial point that she raised at length, which was really quite complicated—at this stage I would not attempt to interpret what she said, let alone produce a reaction to it—will be a very substantial point for the Commons. The issue of greens and open spaces and the rights of developers, and the conflict between the two, is something that we touched on in debating CROW. We came back to it in the first stage of the Bill, and unfortunately we have left it unresolved, but given the good job that this House has done on the rest of the Bill it is perhaps fair to leave the Commons a very interesting point to debate.

Lord Bach: My Lords, I agree with everything that the noble Baroness has just said. Perhaps I may say to the noble Baroness, Lady Byford, that we will study the details of her remarks and that I shall write to her about the application of Clause 15(6) in such a case. I thank her for her comments this afternoon. The matter may very well raise its head in another place, as the noble Baroness, Lady Miller, said.
	Amendments Nos. 7 and 8 relate to a case in which 20 years' recreational use as of right by local inhabitants has already taken place, but is then ended before someone can apply to register the land as a green. Clause 15(3) sets out a "period of grace" for applications; the period of grace is normally to be two years, but there is a transitional provision that when "as of right" use was ended before the clause comes into effect, it is to be five years.
	We resist the literal effect of the amendments, for the same reason that we did so at Report. We do not think that a year is long enough; there needs to be a fair opportunity for an application to be made to register land as a green if it has been used in a qualifying way for at least 20 years, but its use is then brought into question. Once that happens, there is much to do, as I argued at Report, before it is possible to submit a viable application on behalf of local people to register the land as a green—such as those local people having to find out about that area of law, often from scratch. They must do their research, discover that the registration system exists; get hold of guidance material, investigate the detailed criteria for registration; and assess whether they are likely to have a case to make that meets the stringent criteria for registration. They must then find witnesses, and so on.
	As I said in the previous debate, one year may in some cases be long enough for all that to happen, but in others it may not, so our common land policy statement in 2002 said that we were minded to adopt the two-year period of grace that is now provided for. The transitional five-year period of grace reflects the one on which we originally consulted in 2000. It is needed only in a case where "as of right" use has ended before this clause even comes into effect. Until that happens, something as harmless-looking as a "welcome" notice can end even a very lengthy period of "as of right" use. But once Clause 15 takes effect, a challenge to longstanding "as of right" use will have to be overt if it is to be effective: the prohibition notice spoken of in the amendment comes to mind as one means. Once that is the case, the two-year period of grace will be sufficient.
	Either way, I remind the House that the period of grace is a maximum period. There is nothing to stop people applying sooner, and they would be well advised not to leave doing so until the last moment. It is a matter of balance. We think that we have it right. A limited period of grace for application is provided. Failure to register land within that period means the opportunity to register is lost. That is very different from the customary law position under which evidence of any 20 years' qualifying use established land permanently as a green, even if the use ended a very long time ago.
	I shall deal with two of the points that the noble Baroness made. It was suggested that applications to register greens might be made speculatively before any proof of use was gathered, and might take a long time to determine. We agree that these issues have to some extent been a problem to date because of the many uncertainties of greens registration law as it stands. One of the key aims of Clause 15 is to reduce these difficulties.
	Providing a limited period of grace—so long as it remains adequate—will take the current panic out of the situation. It will enable local people to assess whether they are likely to be able to make a viable case for registration. Knee-jerk applications should become less prevalent than they have been to date. By simplifying and clarifying the current law we should make it considerably more straightforward for applications to be determined within a reasonable period on the facts and evidence. Of course, proper consideration must continue to be given to the merits of each case. But we would be disappointed if the average determination time did not substantially shrink as a result of this clause.
	Finally, there was the argument that if a landowner who has tolerated over 20 years' recreational use of a piece of land "as of right" now wishes to end such use, he faces a quandary. Should he end it now—making the period of grace for application under subsection (6)(a) five years from the date of doing so? Or should he wait for commencement—which would make the period of grace two years from the date of doing so—but without any certainty as to how soon Clause 15 will be commenced?
	In the end, I am afraid that is a decision that only the landowner can make. But I can assure the House that we will give high priority to ensuring early commencement of Clause 15. This is an important set of provisions and we need to bring them into effect at the earliest opportunity. I hope that the noble Baroness will withdraw the amendment.

Baroness Byford: My Lords, I am very grateful to the Minister. I certainly will pass on the relevant information relating to the item that I added. It was extremely important to bring it to the notice of the House. I apologise for its complexity. I assure noble Lords that I have loads more papers which are even more complex. I hope that I explained the matter in a fairly informal and straightforward manner.
	The Minister said that this is a matter of balance and that he thought the Government had it right. I understand that the noble Baroness, Lady Miller of Chilthorne Domer, cannot support my Amendment No. 7, but I am very grateful to my noble friend Lord Renton for saying that he thinks we have the matter right. I believe that we have it right. If the Minister does not think that there have been problems to date, or he is hoping not to have problems with this measure, he ought to reflect on the difficulties that the Natural Environment and Rural Communities Bill—which we shall shortly consider—will pose given the huge number of problems that have been raised with regard to rights of way. Having the shorter time period would be a much better and wiser move. Although I am grateful for the Minister's kind words, I do not agree with him and I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 7) shall be agreed to?
	Their Lordships divided: Contents, 84; Not-Contents, 203

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 8 not moved.]

The Duke of Montrose: moved Amendment No. 9:
	Page 9, line 40, at end insert—
	"( ) This section does not apply where the owner of the town or village green is a charity."

The Duke of Montrose: My Lords, the main impetus behind the amendment is to be found in the Minister's words on 28 November at col. 50. Our amendment at that time was an attempt to ensure that the Bill contained clear restrictions on the eligibility of urban land for registration as a town green. The National Playing Fields Association is concerned that the Minister's reply to our case might be interpreted to mean that a valid application to create a town green or a playing field could rest on whether the field gates had been kept locked. Most playing fields are not locked and this amendment is an attempt to protect them from people who might prefer to have a common rather than playing fields and pitches. Exempting charity-owned land would be such a protection.
	Some of your Lordships may have come across this potential area of confusion. It is surely our duty as legislators to remove areas of confusion where possible. The situation is illustrated in the points that we have been given by the National Playing Fields Association, which I hope your Lordships will allow me to outline in full. The association has told us that it,
	"is aware of a number of recreational fields registered as charities which have become registered as village greens under the existing 1965 Act at a later date . . . There is a strong argument, backed up informally by views received from the Legal Department of the Charity Commission, that this is inappropriate and capable of challenge in law . . . This is because the enjoyment of rights under a charitable trust is not 'as of right' of the inhabitants . . . The enjoyment of rights under a public trust is different from the enjoyment of rights directly enforceable through current commons legislation simply by virtue of being an inhabitant of an area . . . It would therefore be helpful if there could be a Ministerial statement making clear whether there is any intended exemption for charitable recreational land . . . Should this not be the case, it would still be helpful for the Government to provide a statement of guidance on this matter, hopefully supporting the informal view of the Charity Commission, which is consistent with advice previously given to the NPFA by our own legal advisor".
	Our amendment is designed to provide clarity in this area. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, the noble Duke raises a very interesting point, which I think is worthy of further discussion. There is a difference between a public, national charity such as the one that he quoted and a charity that is created, for example, by an individual in relation to a small community. Such a charity might indeed be a disadvantage to that community, as the community could end up having fewer rights to its town or village green than it had before the charity was created.
	This is an interesting point, and I regret that this is not Committee stage so that we could have more discussion about it. I can see that in terms of a charity existing as of this moment, there may be some fair points, as the noble Duke quoted from the charity commissioners. However, without exploring the pros and cons more fully at this stage, I would feel very wary about the amendment. The noble Duke has raised a very valid issue which needs to be discussed further in the other place.

Lord Bach: My Lords, the noble Duke may not be surprised to hear that we do not agree that charity land should be exempted from registration as a green, but I thank him for raising this issue and it is important that it should be debated.
	The land would not fall to be registered in the first place unless for at least 20 years a significant number of local inhabitants had used it as of right for lawful sports and pastimes. As we have said in this House, that is a tough test. There may be no regular and discernible pattern of recreational use at all, or there may have been such a pattern but simple notices may have been in place at entry points to the effect that recreational users enter and use the land only with the charity's permission. In such circumstances, a successful claim could not arise.
	On the other hand, if the local inhabitants have not only been using charity land freely over the years for their recreation but have been doing so without force, secrecy or permission, they are likely to have already formed the basis of an application to register the land. We think that in such a case it would be wrong for us to remove the existing scope for registration of such land when we repeal the current provisions about greens registration in favour of this clause.
	The other point that I want to make is that some pieces of land, including playing fields, will be owned by charities that may not be focused on preserving that land. A charity must be driven by its own charitable objects. It may decide that those are best met by releasing land for development and that it cannot give any special weight to any longstanding recreational use that local people may have made of the land in question. Exempting charity land from the scope for registration would remove the ability to protect land of this kind through the registration system.
	Of course we understand the concern from charities—the noble Duke mentioned the National Playing Fields Association—that Clause 15 will impose significant new burdens on them in their capacity as landowners. In our view, that concern is misplaced. If such land has already received the necessary qualifying use, it would be wrong for this clause to exempt land from achieving registration. However, it must be said that in practice, so long as local people remain free to use land for lawful sports and pastimes and do not perceive any threat to such use, they are unlikely to seek to register the land as a green in the first place, even where it already has the qualifying use.
	If, on the other hand, a qualifying pattern of recreational use has not yet been achieved, there are straightforward steps that a charity can take to prevent the land becoming registrable as a result of further use, if that is what it wants to do. For example, it can put up simple notices stating that recreational use takes place only by permission.
	The clause will not make it necessary, as has been suggested, for a charity to stop local people using its land, or to lock gates every evening, to avoid the land becoming registrable. It is well established that recreational use that is expressly permissive cannot give rise to registration as a green.
	The noble Duke mentioned the legal context of this issue. There is a school of thought among some lawyers that recreational use of land that directly reflects the landowner's charitable objects is, by definition, incapable of supporting any claim that the land was used "as of right". The argument runs that, necessarily, the recreational use in such a case takes place with the implied permission of the charity, acting under its charitable objects to make provision for recreation of this type, and is subject to whatever constraints the charity is empowered by its governing instruments to make on such use.
	There is, in fact, no such generalised presumption. The Judicial Committee of your Lordships' House has made it clear—in the case of Beresford v Sunderland City Council, reported in 2004—that what matters when local inhabitants use land owned or managed by a body that has recreational functions, such as a local authority, is the nature of that use and whether the actions of the landowner during the period relied upon would have made them aware that their use took place by permission rather than "as of right". Mere good-natured tolerance of recreational use by local people will tend to support, rather than defeat, a claim that such use took place "as of right".
	Whether the nature of the charity and the actions taken by it would be sufficient to defeat a claim of "as of right" use would entirely be a question of fact and evidence in each case. The fact that land happens to be in charitable ownership will often prove irrelevant when determining whether use has taken place "as of right".

The Duke of Montrose: My Lords, I am very grateful to the Minister for bringing these various legal positions to our attention. The issue now faced by these various charitable associations is quite a burdensome one. In urban areas, notices would have to be stuck up fairly regularly because they would not last very long. That is an additional burden on the charities that own those lands. One also hopes that it does not precipitate a great fashion in fencing off these places and having the gates open for only a limited time during the day, as that would reduce the charitable use of such land. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 24 [Applications etc]:

Lord Bach: moved Amendments Nos. 10 to 13:
	Page 14, line 37, leave out "9" and insert "8"
	Page 14, line 37, at end insert—
	"(aa) paragraph 1 or 3 of Schedule (Authorised severance), and"
	Page 14, line 40, at end insert—
	"(3A) Regulations under subsection (1) may include provision for the appropriate national authority to appoint a person to discharge any or all of its functions in relation to an application made to it under section 16." .
	Page 15, line 19, leave out subsection (6) and insert—
	"(6) Regulations under this section may include provision for—
	(a) the appropriate national authority to appoint persons as eligible to discharge functions of a commons registration authority in relation to applications made to, or proposals made by, the commons registration authority; and
	(b) the appointment of one or more of those persons to discharge functions of the commons registration authority in the case of any particular application or proposal."
	On Question, amendments agreed to.
	Clause 27 [Procedure for establishment]:

Baroness Farrington of Ribbleton: moved Amendment No. 14:
	Page 16, line 33, leave out from "persons" to "land" and insert "having rights (other than rights of common) in relation to, or occupying"

Baroness Farrington of Ribbleton: My Lords, Amendment No. 14 makes a minor change to the description of persons whose representations the national authority must have particular regard to in deciding whether to make an order establishing a commons association.
	Clause 27(5)(a) refers to persons who have an interest in land, a point made by several noble Lords and by the noble Baroness, Lady Byford, at earlier stages. Our amendment would refer, instead, to persons who have rights in relation to land. The amendment ensures, first, that we achieve greater consistency with similar provisions in other clauses.
	Secondly, the amendment removes the possibility of uncertainty about what is meant by an interest in land. Noble Lords on all sides of the House raised that question. Many people are interested—in the informal sense of the word—in how a common is managed or in using a common for some purpose. But these are not the sort of people to whom we think the national authority should have particular regard when deciding whether to establish a commons association. In our view, particular regard should be paid only to representations from those with legal rights in relation to a common, and that includes owners and those with other legal rights, such as sporting rights.
	Subsection (5)(a) now clearly applies to those who either occupy the land or have rights in relation to it, other than those with rights of common; the latter are separately dealt with in subsection (5)(b). Of course, we still have subsection (5)(c), which ensures that particular regard is paid to representations from persons who have statutory functions relating to the maintenance or management of the land. I hope we have reassured noble Lords. I beg to move.

Baroness Byford: My Lords, we debated this fully earlier, and I am grateful to the Minister.

Lord Plumb: My Lords, we have had a good and full explanation of this matter. Once we talk about rights, however—remembering what the Minister said earlier about my noble friend Lord Inglewood's contribution—we are taking the long view and therefore have to get this right.
	There are three quite important reasons why I am concerned. First, the Bill, as named in this proposal, could discriminate against voluntary commons associations as it does away with the rules set up in 1965, which, in this context, have generally worked well. Secondly, a new Bill would be effective only for statutory associations, leaving a void between the two. Thirdly, the management of a particular common would be vested in a commons association.
	Knowing many of the occupiers of common land for grazing animals, I think they would be left confused over identification. If there has to be a statutory body, surely it would appear that the voluntary commons association becomes totally disenfranchised, which could be significant in both monetary and administrative terms. The public interest in common land is growing, and there is a need for countervailing strengths to take care of those livestock areas.
	This is, therefore, put clearly, a case of the voluntary versus the statutory instruments, and a matter of major concern to those who occupy common lands. I hope the Minister agrees that means can be found to accommodate voluntary organisations, perhaps to be affiliated to a commoners' federation or a forum, to act as an umbrella to take on the mantle of statutory commons associations, and operate within the parameters set by a national authority.
	The issue should perhaps have been spotted earlier in the debate. I am sure that this was raised in different forms at Second Reading. The people concerned had perhaps not realised the difference between voluntary and statutory associations at that stage.

Baroness Farrington of Ribbleton: My Lords, unless inspiration comes to me, the noble Lord, Lord Plumb, is using his longer experience, and greater skill than I possess, to draw in issues which are rather wide of the point of this government amendment.
	If a statutory association is sought, it is likely that the voluntary association would be seeking it. It is extremely unlikely, if a voluntary association exists, that it would not be involved in the process, because it will inevitably consist of the people with the interest—as defined by this government amendment—in the land concerned. On the narrow point of this amendment, therefore, I can reassure the noble Lord.
	I will look at the slightly broader point of this amendment and, if necessary, write to the noble Lord if he has raised new points. I am sure, however, that he would not expect me to go into them at Third Reading.

Lord Plumb: My Lords, I am grateful to the Minister. The reassurance is most acceptable.

On Question, amendment agreed to.
	Clause 30 [Constitution: supplementary]:

Lord Bach: moved Amendment No. 15:
	Page 17, line 37, at end insert—
	"(aa) participation in the association by persons other than members;"

Lord Bach: My Lords, this group of amendments again responds to concerns expressed in earlier debates by the noble Baroness, Lady Byford, this time about the nature of membership of a commons association.
	A commons association established under Part 2 will consist of people appointed—through election or other means—as members of the governing body of the association. They will represent the different interests in the common. These members will make the rules, through majority voting, and all its executive decisions. The number of members in each association will vary, depending on how many commons are in the association, and the relative size and number of the different interests being represented.
	In an association made up of only two or three commons, where only the landowner and common rights holders require representation, the members may number fewer than 10. In a large association covering many commons with many active and inactive rights holders, landowners and a range of other rights holders, there may be 20 to 30. For example, as the noble Lord, Lord Tyler, knows, the Dartmoor Commoners' Council consists of a minimum of 26 appointed members.
	Most people who have rights in a common will therefore not actually be members of an association, but they will be participants in the sense that they will be eligible to appoint members to represent their interests in the association. I understand that noble Lords would like to see all the participants in the association—that is to say, the commoners, owners and other interest holders—described in the legislation as "members". But that could confuse people even more. Perhaps I may compare a commons association to a district council. The governing body comprises the elected members, who have been voted into office, whereas the participants in the election for the members of the district council are the residents of the council area. One would not expect the residents to be described as "members of Charnwood" or "members of Harborough"—the noble Baroness will understand better than most what I mean—because their qualification to vote depends solely on their residency within the district. In the same way, the qualification of participants to vote in an election to the commons association will depend solely on their status as commoners, owners or holders of other interests in the common. To call the participants "members" would imply that they had to do something to qualify; for example, that they had to complete an annual membership form. It would equally imply that the association could exclude from membership those with whom it fell out. So, on balance, we prefer the term "participants" as a more neutral and, indeed, inclusive expression.
	Amendments Nos. 15 and 18 make clear that the standard constitution or the establishment order for an association can include terms for participation in an association as well as membership. This could include, for example, terms about participants' entitlement to elect members and to attend meetings. This draws a clear distinction. Amendment No. 19 is consequential.
	I understand that this may not fully answer all concerns about the roles of participants and members in commons associations, and that we may not have got this quite right. So, as I indicated in my recent letter to noble Lords, we will continue to explore the issues surrounding the terminology used in Clause 30 with stakeholders and in another place. We would be grateful if the government amendments to which I have spoken are agreed today to take us through to another place.
	Amendments Nos. 16 and 17 clarify that members of an association may be appointed to represent interests, without necessarily being elected. Where the number of individuals with a particular interest is small—for example, if there were only one or two landowners, or if there were no competition for a post—an election would not be feasible or necessary. These amendments allow members to be appointed through an agreed procedure that does not involve a vote. I stress that elections will be used where there is a sufficient number of persons to warrant such a process. This amendment merely enables the most appropriate method of appointing members to the governing body to be used.
	Amendment No. 22 makes a minor change to commons associations' ancillary power to raise money through the payment of fees. I beg to move.

Lord Livsey of Talgarth: My Lords, the Minister referred to a governing body. Was that in relation only to a statutory commons, or does it cover the voluntary sector?

The Earl of Caithness: My Lords, I am grateful for the clarifications the noble Lord has introduced today. How many members make up the "sufficient" members to have a vote? Where will he draw the line? He talked about one or two landlords. Will it be up to the statutory commons association to decide whether it is an appointment system or a voting system, or will there be some regulation on this?
	As the noble Lord will know, I dislike statutory commons associations. I have said that right from the beginning. I have not changed my view at all, having listened to his pleadings throughout the Bill. But I would like to thank him and his team for all they have done to try and accommodate our concerns and make the Bill more acceptable than it was when it was introduced.

Baroness Byford: My Lords, I thank the Minister for putting forward his amendments and, particularly, for saying that he recognises that there is a slight problem, and that the Government are willing to explore the issues when the Bill moves to another place.
	This amendment is an attempt to meet our concerns, which the Minister has explained, about how to involve commoners in the association when the only members are the 10 or 12 elected or appointed persons who will run it. Again, that is a slight play on words. I should say, for those noble Lords who were not in our previous discussions, that before, anybody who was a member of an association would have regarded themselves as such a member; now, with what the Government propose, they will technically not be a member in that way. That is why we raised this issue before. The remaining government amendments to Clause 30 are all part of the same exercise.
	In his letter of explanation the Minister stated that he would welcome comments on whether these five amendments,
	"improve the understanding of how commons associations are intended to operate".
	We are still uncomfortable with the terminology. We feel that where everyone is paying a fee or a subscription, either they should all be members or the management team should be a council or a board with no one classed as a member. I reiterate that today.
	The type and scale of the confusion caused by the present wording has been demonstrated to me in respect of existing, small, voluntary commons associations—a matter which my noble friend Lord Plumb raised on the previous amendment. If they go down the statutory route, the money they will have to pay to support the costs of the association is likely to be larger than that indicated by the Minister on 30 November at col. 240. Unfortunately, there are areas of the country, particularly in Wales and the north of England, where commons frequently support only a few people.
	Under the terms of the Bill, the 1965 Act will be repealed in its entirety, leaving the voluntary organisations, to which my noble friend referred earlier, totally without legal protection. A number of those likely to be affected in this way have worked out that they could apply to have a single commons association covering, for example, the whole of Wales—a very large area indeed. It would then consist of a board of 10 to 12 elected representatives, who would then mandate a council consisting of one person from each voluntary association. By their reasoning this would then bring each of the voluntary associations under the umbrella of the overarching statutory body. In return, the constituent commons would agree to abide by the rules set by the board for the conduct of commons' business.
	The problem is that they cannot be sure that this suggestion would conform to the new law and, while I think it is eminently practical and a sensible way of avoiding the unpleasant black hole, I share their concern. The Minister has explained a little more in introducing the amendment today. Could he reassure the House that the Bill will allow a number of commoners to join together in a statutory association, and for a number of voluntary associations to federate under the umbrella of a single statutory association?
	If I may digress for a moment, the difficulty is that many of the smaller, voluntary organisations have very limited fees and very limited money comes into the pot compared to a big, statutory association. They feel that those fees and the costs of having to have records, meetings and formal set-ups will rise considerably compared to their current costs. The idea of a small board and a large council covering a wide area is not new. I understand that the National Sheep Association is run very effectively by a board of 15 with a council of about 200.
	My noble friend Lord Plumb tried to raise this point under the previous amendment. Unfortunately, it is typical that when people are considering legislation, they do not realise the implications for some smaller groups until it is almost too late. That is why the matter has been brought to the House at a very late date. The Minister assured us earlier that he is willing to explore the issues that we have raised, for which I am very grateful. I do not expect him to respond fully today, but it is essential that it is pursued when it goes to another place. There is a big difference between the larger voluntary associations, which may have sufficient fees coming in, and the very small ones, which, if they want to become an association, will have to conform to and fulfil the requirements laid down in the Bill, but will not have the funds to do so.
	An overarching, umbrella organisation may solve some of the problems and concerns expressed by my noble friend Lord Caithness. The difficulty for those organisations is that, unless they become part of a statutory association, they will lose out on claiming some of the benefits of being under the umbrella. That is why I have taken a little time to explain the situation. I am grateful to the Minister for moving his amendment.

Lord Tyler: My Lords, I endorse what the noble Baroness said about the two-level federal structure—if I dare use that expression in your Lordships' House—which applies in other parts of the country and works very well with smaller voluntary commons associations.

Lord Bach: My Lords, I am grateful to all noble Lords who have taken part in this debate. We will take this back to think about it again; I am sure that the issues surrounding it will emerge in another place. The answer to the noble Lord, Lord Livsey, is that only a statutory body is concerned. The noble Earl, Lord Caithness, to whom I am very grateful for his kind words, asked who would decide. At the very end, the Secretary of State will decide, but that will be following consultation. We are looking for a common-sense, practical approach to these matters, not something that is too hidebound in statute. Having said that, I hope that the House will forgive me if I do not go further into the matter today.

On Question, amendment agreed to.

Lord Bach: moved Amendments Nos. 16 to 19:
	Page 18, line 1, leave out "election of members" and insert "appointment of members (by election or otherwise)"
	Page 18, line 2, leave out "elected" and insert "appointed"
	Page 18, line 7, at end insert—
	"( ) The terms referred to in subsection (2)(aa) include in particular terms as to—
	(a) entitlement to elect members;
	(b) entitlement to attend meetings."
	Page 18, line 10, leave out paragraph (b).
	On Question, amendments agreed to.
	Clause 32 [Ancillary powers:

Lord Bach: moved Amendment No. 20:
	Page 19, line 24, at end insert "(including by applying for funds from any source)"

Lord Bach: My Lords, the amendment clarifies the nature of commons associations powers to raise money. It emphasises that an association may apply for funds from any source to raise money. Of course, that includes agri-environment schemes, rural development programmes, heritage lottery funding and any other funding programme currently available. The amendment was prompted by concern expressed by noble Lords that the link between commons associations and agri-environment schemes was not stated more explicitly in the Bill. We have taken the opportunity since Report, as I promised, to explore that issue and concluded that it would be best to make a more explicit reference to the ability of commons associations to raise money from a wide range of sources.
	Our amendment is made to the ancillary powers rather than the functions of commons associations. The activity of raising money from any particular source cannot properly be regarded as a core function. The primary purpose of the association is to engage in activities related to the management of agriculture, vegetation and common rights—not to raise money. Of course, raising money may be an important activity for an association, but it is an ancillary activity that will enable the association to carry out its primary functions.
	Our intention with this amendment is to make it quite clear that an association can raise money through application to any source of funding. This includes agri-environment schemes. Why then do we deliberately avoid the phrase "agri-environment scheme", which appears on an amendment that may be discussed in this group? The government amendment avoids such a mention, which is not to suggest that we do not consider such schemes to be an important source of funding. I have said that we do. We will encourage associations to enter into schemes, such as the higher level environmental stewardship scheme. In many cases, we would expect commons associations to be formed in order to benefit from financial support afforded by such schemes.
	We have not explicitly mentioned agri-environment schemes because, with common land legislation, one has to take the long view. In the decades to come—not in the years immediately ahead—there may be no such thing as an agri-environment scheme. Future funding may take a different form, either as a result of domestic or EU policy changes, and our aim here is to enable associations to adapt to changing circumstances. I repeat that our amendment does this by making explicit that commons associations may apply for funds from any source.
	I hope it is fair to say that a general principle of legislation is that, if a statute gives a body broad powers, as we do here, it is not sensible in the same breath to refer to one detailed example of such a power. To do so may—I repeat, may—tend to undermine the generality of the broad power. This is not out of sympathy with what is behind an amendment that I suspect is about to be spoken to—it is that it is not necessary and would be against the general principle of legislation. I beg to move.

Lord Tyler: My Lords, I wish to respond to the Minister's advocacy of his Amendment No. 20 and also, as he has anticipated, to refer to Amendment No. 21, tabled in my name and that of my noble friend. I and my colleagues welcome the way in which the Minister has responded to our anxiety, which we expressed at various stages during the passage of the Bill, but notably on Report. We welcome the movement by the Government. Nothing that I shall now say in any way undermines that. However, perhaps I may say that the Minister protests too much about the difficulties that might arise from our amendment. I shall speak briefly in these terms, but I hope that the Minister will take it from me that brevity in this case should be no indication of any lack of sincerity about our amendment or the severity of the problems currently facing highland and upland livestock farmers in the south-west, Wales and right up through the Pennines. They are on the brink of economic collapse in many cases and require every sort of encouragement to participate in the funding schemes to which we specifically refer.
	Perhaps I may draw your Lordships' attention to the specifics of our amendment. It does not, as the Minister suggested, tie funding to agri-environment schemes. The noble Lord, Lord Plumb, is right to talk about the long term. I have been involved enough in working with farmers to know that they think about the long term. If the Minister thinks that agri-environment will not be on the agenda of farmers in 40 or 50 years' time, he is a brave man. I think that it is with us semi-permanently or permanently. But even if he is right, we have also used a similar phrase to his amendment to ensure that should the phrase "agri-environment" disappear from the lexicon, we can still make sure that these ancillary powers are there. I should also say in passing that we accept that this is the right place in the Bill and that the Minister is right to put it here.
	Making specific reference to agri-environment scheme funding is important for four reasons. The real danger for this legislation is not that it will be too powerful and influential, but that it will simply wither on the vine—unless we provide a specific encouragement to those responsible for commons to set up statutory commons associations. It will be abortive. I am pleased to note that in its briefing on today's debate, the National Farmers' Union supports our initiative. It recognises the importance of this provision.
	That brings me to my second point. There should be an explicit advantage to those who wish to form a statutory association, otherwise they simply will not bother. Highland and upland farmers are busy people and do not have time to sit in committees or on association boards unless they can see a specific advantage in so doing. In the context of the new version of the CAP, let alone what will come after 2012 when I am sure it will move even further in this direction, we believe that as much emphasis as possible must be placed on agri-environment schemes in the Bill itself.
	The noble Lord has just said that in addressing legislation it is important to do so with certain principles in mind. One of those principles is that we should say what we mean and mean what we say. In emphasising the real initiative behind this legislation, it is critical to indicate that explicit funding will be easily available. We should not be mealy-mouthed about it.
	Finally, and again I echo the experience of the noble Lord, Lord Plumb, we must take the long view. Surely if this Bill is itself to be sustainable and still in place in 20, 30, 40 or 50 years, we have to ensure that it provides effective encouragement to those concerned enough to go to the trouble of setting up a statutory association.
	There has been much discussion during our deliberations this afternoon about how in the past people have given their time, effort and energy to the creation of voluntary associations. That will not transfer into statutory associations unless there is a clear advantage in financial terms. That is what we propose in the amendment.

Lord Williams of Elvel: My Lords, I disagree with the noble Lord, Lord Tyler, and agree with my noble friend, whose amendment covers all the arrangements that the noble Lord, Lord Tyler, envisages. My noble friend has set it out perfectly well. On the other hand, I am a little doubtful about the wording of my noble friend's amendment, which states,
	"(including by applying for funds from any source)".
	In my banking days I used to worry about reputable sources and disreputable ones. I hope very much that my noble friend will be able to say that the purpose of the amendment is to allow commons associations to apply for funds from reputable sources, but not from disreputable sources. We all know, in a world that goes along as it does, there may be occasions when someone will say, "The commons association wants to do this, that or thus. Here am I, prepared to provide the funds". What the downside is, we know not. I hope that my noble friend will be able to assure me, as a ministerial statement, that "source" means a reputable one.

The Duke of Montrose: My Lords, after the comments of the noble Lord, Lord Tyler, I must declare my interest as a Highland and upland farmer, and someone who does make claims under agri-environmental schemes—though I am not necessarily doing myself much good in that regard during my time here. I have listened with interest to the contribution of the noble Lord, Lord Tyler. After scratching my head a little, I find myself in some sympathy with the Minister in looking for a simpler way to phrase the objective here. As the single farm payment runs in England at the moment, the various people who have an interest in the historical element of common grazing will have amalgamated their payments on to their own holdings. So there will be no historical payments on the commons but I do not know what will happen to the land-based payments. Perhaps the noble Lord wants the commons associations to have the power to register themselves as agricultural holdings. This is a complicated area and the Minister has perhaps taken the right approach.

Lord Bach: My Lords, it has been a very interesting debate. I thank the noble Lord, Lord Tyler, in particular, for the way in which he put his points. But I still disagree with him and I shall tell him why in a moment.
	Dealing, first, with the point raised by my noble friend Lord Williams, I am sure that the commons associations would be well advised to apply to reputable sources, but my noble friend will forgive me if we do not provide for that on the face of the Bill. The point he makes is well understood.
	The noble Lord, Lord Tyler, took some comfort from the approach of the National Farmers Union. I am not sure that we read its approach in quite the same way. Everyone always wants to be on the side of the National Farmers Union—certainly I do and I am sure the noble Lord does too. In its parliamentary briefing, the NFU said:
	"We welcome Lord Bach's amendment to clause 32"—
	to which I have spoken—
	"which makes it clear that in raising money commons associations can apply for funds from any source. We hope that in response to the amendment in the names of Lords Livsey and Tyler the minister will confirm that associations may apply, and will be eligible for, agri-environment scheme funding".
	I happily confirm exactly that.
	I do not think that the National Farmers Union is saying that the amendment spoken to by the noble Lord has to be on the face of the Bill. Tempting though the arguments put forward by the noble Lord, Lord Tyler, may be, I would still argue the general principle that if a statute gives a body broad powers it is not sensible—however attractive it may seem pro tem—in the same breath to refer to one detailed example of such a power. That is the principle on which I will stick in this instance.
	Of course there are many examples of the way in which upland farmers are already using stewardship. I absolutely accept what the noble Lord, Lord Tyler, said about the difficult times that upland farmers—and, indeed, other farmers in other parts of the country—are facing at the present time. I agree that they need every encouragement to enter into stewardship schemes. We will give them every encouragement—but that does not include putting it on the face of the Bill, where it does not really fit.

On Question, amendment agreed to.
	[Amendment No. 21 not moved.]

Lord Bach: moved Amendment No. 22:
	Page 19, line 31, leave out "membership of, or"
	On Question, amendment agreed to.

Lord Livsey of Talgarth: moved Amendment No. 23:
	After Clause 37, insert the following new clause—
	"FEDERATIONS OF COMMONS ASSOCIATIONS
	(1) There shall be a Federation of commons associations for England.
	(2) The functions of the Federation shall include—
	(a) the co-ordination of all commons associations in England, who shall be members of the Federation,
	(b) assisting commons associations to achieve their objectives,
	(c) the provision of rules and a constitution for use by voluntary commons associations.
	(3) There shall be a Federation of commons associations for Wales.
	(4) The functions of the Federation shall include—
	(a) the co-ordination of all commons associations in Wales, who shall be members of the Federation,
	(b) assisting commons associations to achieve their objectives,
	(c) the provision of rules and a constitution for use by voluntary commons associations.

Lord Livsey of Talgarth: My Lords, the Public Bill Office has made a small error by attaching the name of the noble Lord, Lord Selsdon, to this amendment. In old-politics-speak: "I am not Selsdon Man". My name should have been there. It is unfortunate, but I have not beaten anyone up about it or anything like that.
	Amendment No. 23 seeks to insert a new clause into the Bill after Clause 37. We would like to see a federation of commons associations in England with the following functions:
	"the co-ordination of all commons associations in England, who shall be members of the Federation . . . assisting commons associations to achieve their objectives . . . the provision of rules and a constitution for use by voluntary commons associations".
	In subsection (3) of the amendment we propose exactly the same structure for Wales—a federation of commons associations for Wales—with precisely the same functions as the ones I have just read out.
	The amendment seeks to address the frustration expressed by the noble Lord, Lord Plumb, and the noble Baroness, Lady Byford, about the structure of the legislation and, in particular, the fact that it addresses statutory commons when the vast majority of commons—in fact, 99 per cent of them—are voluntary commons. That is the situation in which we find ourselves today. There are so many voluntary commons associations, as other noble Lords have said, because voluntary commons were set up as a result of the Commons Registration Act 1965. So there are no statutory commons existing in any real number.
	We share exactly the same concern as the noble Lord, Lord Plumb, the noble Baroness, Lady Byford, my noble friend Lord Tyler and others—that the powers given to statutory commons and their ability to access funding, particularly for the environment, will be denied to voluntary bodies. Because voluntary commons association are inadequately resourced, many of them—I think I am right in saying that there are 194 in my area—are not in a position to take advantage, nor do they wish to be statutory commons. The uptake, sadly, will be minimal because of the bureaucracy, a lack of staff and so on.
	We envisage these federations—the overarching bodies referred to by the noble Baroness, Lady Byford—as a possible solution to the problem that we have been discussing for the past three-quarters of an hour or so. The federations in England and Wales could take on a statutory role to enable the voluntary commons associations to participate and to get the benefits into the upland areas—which have quite rightly been described as being so hard pressed—in order that they should become more viable. It is one way of doing it.
	In the Bill as drafted there appears to be a fundamental fracture between the legislation for statutory commons and the overwhelming number of voluntary commons associations. The amendment would help to bring more cohesion to the legislation and assist the process of achieving the Government's desirable objective of improving the situation for those with common rights. We believe that the amendment could be the way forward. It would assist the process; revolutionise the legislation, which currently addresses only statutory commons; and would benefit a far wider number of commons in the voluntary sector. I beg to move.

Lord Renton: My Lords, I broadly rather support the amendment. However, can the noble Lord explain how it is that on four or five occasions he referred to the co-ordination of all commons associations? What does "co-ordination" mean in that context? At the end of his amendment, we find the expression "voluntary commons association". How does that differ from any other commons association?

Baroness Byford: My Lords, we have had the debate on the earlier amendment so I shall not go through it. I have reservations about the wording of the amendment of the noble Lord, Lord Livsey. I have reservations about the idea of a single umbrella body for the whole of England. Regional bodies would perhaps be more appropriate because of the sheer cost of getting everybody together. While I support what the noble Lord is trying to do in theory, and while an umbrella body for Wales might well be relevant, I am not so sure about such a body for the whole of England. One would again have to look at costs. Who would pay for it? How would people get there? What administration would be involved? I shall leave the noble Lord, Lord Livsey, to answer the question of the noble Lord, Lord Renton.
	As it is laid out, the amendment is a little too prescriptive. While I would prefer it to be more general, in the way I described when we were debating the previous amendment, I understand where the noble Lord, Lord Livsey, is coming from.

Baroness Farrington of Ribbleton: My Lords, I was surprised by the noble Lord, Lord Livsey. He knows, as I do, that "here be dragons" in drafting legislation that states, "In Wales, there shall be". I shall not take a route into a wood full of Welsh dragons, because the Welsh people jealously and rightly guard their ability to make their own decisions. I agree with the noble Baroness, Lady Byford, on this matter. Such an association ought to rise from below and not be imposed from above, so that people can choose the form that it takes. It is no good the noble Lord, Lord Greaves, laughing. He does not have the several years' experience that I have had of speaking for the Government on Wales at this Dispatch Box. During that time, I learnt exactly where the ice was thin and where it was not sensible to tread.
	We welcome the idea of establishing federations, but as I and the noble Baroness, Lady Byford, said, they should be developed from the bottom up rather than imposed from above by statute. Such bodies will be more effective if created and managed by committed people who represent the interests of commoners. Providing in legislation that there shall be a federation of commons associations will do nothing to garner the enthusiasm and commitment that would be needed to create such a body. Indeed, the amendment might even hinder the development of an effective organisation by placing unnecessary restrictions on what it may or may not be able to do.
	We have already supported the formation of two federated bodies in England using funds from the England Rural Development Programme, and we are aware of the developing role of the Welsh commoners forum which represents the interests of commons associations in Wales. Those bodies play a valuable role in the provision of advice and information to commoners and the public in the regions in which they operate. They have proved effective also in communicating the concerns of commoners to government departments and agencies. I place on record our welcome for their involvement in briefing on the Bill.
	All the functions for a federation that are proposed in the amendment can be carried out now without waiting for legislation. For example, a federation would be able to assist commons associations in achieving their objectives by providing expert advice and best-practice guidance. A federation might also be able to provide practical advice on development of a constitution and on rule-making; for example, through providing model constitutions and model rules. This would be a valuable service that would assist any voluntary commoners association which is considering taking statutory powers. A federation could also provide services for the mediation of difficult issues, perhaps providing persons to act as independent arbitrators in disputes. There is nothing to prevent the development of such a body now if the commoners felt that it would be of value. Legislation is not required. On Dartmoor, for example, many voluntary commoners associations happily coexist with the statutory Dartmoor Commoners Council.
	In answer to the question of the noble Lord, Lord Renton, about the difference between statutory or voluntary groups, I say that a voluntary commons association is a group of common rights holders and others who choose to join together to manage their rights on a common in a more co-operative manner. In answer to the noble Lord, Lord Livsey, I say that voluntary bodies can even now apply for agri-environment funding. Many bodies in England have successfully done so. However, entering a scheme requires near-unanimous support from commoners. This legislation removes that constraint. I am sure that he will welcome that information and hope that the amendment will not be pressed.

Lord Livsey of Talgarth: My Lords, I thank those who have spoken in this debate. I hope that the noble Lord, Lord Renton, understood from the Minister the principles behind voluntary commons associations. They have existed for some considerable time through use in their locality. Co-ordination is one of the forms of help which these associations require. The amendment would attempt to enable a framework to emerge and encourage the voluntary commons associations to participate in it. It was difficult to decide how far to draft the amendment. If it were minimalist, it might be thought to be trivial. I detect, though I would never address it in hard language, a hint of a conspiracy between the Minister and the Conservative Front Bench in saying that the amendment is too prescriptive and hinting that there will be a federation of commons associations for Wales. As somebody who lives and works in Wales and who has represented the country for some considerable time, I know that the problem is that the National Assembly for Wales does not have the power to create this. It can achieve it only by statute in this way. I support quite a lot of the Government's forthcoming Bill on the governance of Wales which will give the Welsh Assembly more powers.

Baroness Farrington of Ribbleton: My Lords, I hope that I have made myself plain. There is a voluntary association in Wales. Nothing in this Bill prevents there being one. We do not need to give any powers to anyone to do that, unless we wish to instruct them that they must.

Lord Livsey of Talgarth: My Lords, it might interest the Minister to learn that I spent two hours of my Sunday discussing this very matter with the voluntary association of commons in Wales. It supports a clause of this kind being inserted in the Bill, because it does not have the power to create a federation, nor does the Welsh Assembly. It is very difficult to achieve. The benefits of statutory commons will not be accessed unless an overarching body in which voluntary associations will be able to participate exists. That is the problem. That is why we have put forward this amendment, which might assist the voluntary commons associations. Although they are participants from the grassroots upwards, they desire this kind of amendment to enable them to gain the benefits of a statutory commons association without all the problems of bureaucracy that they would face as very small voluntary commons associations. At present, they cannot participate, nor do they want to for those very good reasons. This amendment might assist them.
	I hear what has been said in this debate, and I hope that a model of this kind is a constructive contribution to it.

Lord Renton: My Lords, would the noble Lord please explain how it can be said that some commons associations are voluntary when, in fact, they are all voluntary?

Lord Livsey of Talgarth: My Lords, the formation of statutory commons is contained in the Bill. Encouragement for voluntary commons to become statutory commons is part of the objective. I think that that is the best way in which to describe the situation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 45 [Powers of local authorities over unclaimed land]:

Lord Greaves: moved Amendment No. 24:
	Page 27, line 14, at end insert—
	"( ) Where subsection (1) applies and a commons association established under Part 2 does not exist in relation to the land, a local authority may assume and exercise any of the rights of management of the land which would otherwise be held by the owner, until such time as a commons association exists or the owner is identified."

Lord Greaves: My Lords, this is one of the important remaining issues, which has run throughout our proceedings in this House—the matter of unclaimed commons, which have no known owners and are therefore in a state of limbo.
	There are two major problems. First, there is the problem of encroachment and unauthorised development of all sorts—big, small and very small blockages and so on. Secondly, there is the problem of inadequate management and, in some cases, dire neglect, when nobody is looking after the common, in which case, the common may be overgrown, it may be a mess or it may be used as a tip or a dump. I shall not discuss the matter in detail or detain your Lordships with a long list of commons in that situation—but I do have a long list here from all parts of the country, from the Lake District, the Pennines, the south-west and the Midlands, where there are all sorts of problems with things happening on commons which ought not to be happening and which are unauthorised, but there is no owner to stop those things happening and nobody is bothering about it. The basic reason is that they are unclaimed—they are commons with nobody to own them or look after them.
	We discussed the matter in considerable detail in Committee, when I proposed that local authorities should have the power, though not the duty, to take over ownership of such commons—and I would still prefer that option to be available. But it has been resisted by the Government, and we are clearly not going to make progress on it, so I shall not move such an amendment today. On Report I tabled the amendment which is repeated today in Amendment No. 24, which sets out powers for local authorities to manage such commons as if they were the owners until such time as a commons association takes it over or until owners turn up and claim the common.
	The noble Baroness, Lady Farrington, told me on Report that that was unnecessary because there were already statutory powers for local authorities, parish councils and principal councils to do just that, so it did not need to be put in the Bill. We had a lively discussion about that and, subsequently, the Minister wrote to us about all sorts of things, including setting out the powers that the Government believe local authorities have. The noble Baroness, Lady Farrington, said:
	"The local authority may consider taking the land in hand and managing it as if it were the owner".—[Official Report, 30/11/05; col. 282.]
	The letter set out various statutes, including the Local Government Act 2000, the Open Spaces Act 1906 and the Commons Act 1899, which the Government believe give all the powers necessary.
	Today, I have tabled an amendment to get that ministerial statement on record, so that Members of the House of Commons can consider the matter, challenge what has been said if they think that it is not right and discuss it further—because it may go further. Alternatively, it will simply be there on the record and everybody will know what the position is. It would be extremely helpful if the noble Baroness would do that now. Will she also consider whether the guidance that the Government have promised, which will be given to local authorities, could include the information that I hope and trust she will now give us, to encourage them to be much more proactive in looking after the commons? I beg to move.

Baroness Farrington of Ribbleton: My Lords, I understand why the noble Lord would like on record the contents of the letter sent by my noble friend to all noble Lords who took part in debates on the Bill at various stages. I am delighted to confirm, by repeating what the letter said, that all local authorities, including parish councils, under Section 9 of the Open Spaces Act 1906, may undertake the entire or partial care, management and control of any open space, whether any interest in the soil is transferred to the local authority or not. If the powers are considered by a local authority to be insufficient, we would commend the making of the scheme for the management of the common land under Part I of the Commons Act 1899. That is a relatively simple procedure by which a district council, including a unitary authority, or a national park authority, may consult on and make a scheme for the management and regulation of any common, such powers then being vested in the authority. It is possible for the owner or one-third in value of the commoners to veto a scheme; but if the land is unclaimed and untended, it seems unlikely that a veto would be exercised. We also suggest that approach if the authority is seeking funding through an agri-environmental scheme. The second possibility is that the local interests in a common could apply to the national authority for an order establishing a commons association with representation of those local interests on the governing body. That would be particularly appropriate when unclaimed common land remains important to the local agricultural economy.
	I hope that the noble Lord understands that we simply do not need the powers conferred by his amendment, as they are already amply provided for in Part I of the 1899 Act and Part 2 of this Bill. Those powers have been carefully crafted to balance the various interests in unclaimed common land, and I commend their use. We certainly intend to write a circular to local authorities about their responsibilities under the legislation, and I expect that we shall consult on a circular in due course. I thank the noble Lord for his interest and hope that the reply has been helpful.

Lord Greaves: My Lords, I am most grateful to the Minister for doing as much as I hoped that she might do today. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 53 [Commencement]:

Lord Bach: moved Amendment No. 25:
	Page 31, line 3, leave out "sections 9," and insert "section 9 and Schedule (Authorised severance) and sections"
	On Question, amendment agreed to.
	Clause 54 [Severance: transitional]:

Lord Bach: moved Amendments Nos. 26 and 27:
	Page 31, line 13, leave out "Subsection (7) of section 9" and insert "Sub-paragraph (5) of paragraph 1 of Schedule (Authorised severance)"
	Page 31, line 14, leave out "subsection (3) of that section" and insert "that paragraph"
	On Question, amendments agreed to.

Lord Bach: moved Amendment No. 28:
	Before Schedule 1, insert the following new schedule—
	"AUTHORISED SEVERANCE Severance by transfer to public bodies
	1 (1) A right of common to which section 9 applies may on or after the day on which this Schedule comes into force be severed permanently from the land to which it is attached by being transferred on its own to—
	(a) any commons association established for the land;
	(b) Natural England (where the land or any part of it is in England); or
	(c) the Countryside Council for Wales (where the land or any part of it is in Wales).
	(2) Where a person proposes to sever a right of common to which section 9 applies by a transfer under sub-paragraph (1)(b) or (c), Natural England or the Countryside Council for Wales as the case may be must—
	(a) give notice of the proposal to the owner of the land over which the right is exercisable unless his name and address cannot reasonably be ascertained;
	(b) in a case where there is no commons association established for the land, give notice of the proposal to such persons (if any) as they consider represent the interests of persons exercising rights of common over the land.
	(3) A notice under sub-paragraph (2) must be given at least two months before the transfer and must—
	(a) specify the name and address of the owner of the land to which the right is attached;
	(b) describe the right proposed to be transferred, giving such details as regulations may specify;
	(c) state the proposed consideration for the transfer; and
	(d) give such other information as regulations may specify.
	(4) Where a right of common to which section 9 applies is exercisable over land for which a commons association is established, the right may only be severed by a transfer under sub-paragraph (1)(b) or (c) if that association consents to the transfer.
	(5) The severance of a right of common by its transfer under sub-paragraph (1)—
	(a) only has effect if the transfer complies with such requirements as to form and content as regulations may provide; and
	(b) does not operate at law until, on an application under this Schedule, the transferee is registered as the owner of the right in the register of common land or of town or village greens in which the right is registered.
	Temporary severance by letting or leasing
	2 (1) A right of common to which section 9 applies may, on or after the day on which this Schedule comes into force, to any extent be severed temporarily from the land to which it is attached by virtue of the right, or all or part of the land, being leased or licensed on its own in accordance with—
	(a) provision made by order by the appropriate national authority; or
	(b) rules made in relation to the land by a commons association under section 31.
	(2) Provision under sub-paragraph (1)(a) and rules referred to in sub-paragraph (1)(b) may be framed by reference to—
	(a) particular land or descriptions of land;
	(b) descriptions of persons to whom rights of common may be leased or licensed.
	(3) Where (a) provision under sub-paragraph (1)(a) applies in relation to any land, and
	(b) rules referred to in sub-paragraph (1)(b) also apply in relation to that land and are inconsistent with that provision,
	the rules prevail over that provision, to the extent of the inconsistency, in relation to that land.
	(4) The appropriate national authority may by order provide that the leasing or licensing of a right of common (whether authorised by provision under sub-paragraph (1)(a) or by rules referred to in sub-paragraph (1)(b)) must comply with such requirements as to form and content as the order may provide.
	Severance authorised by order
	3 (1) The appropriate national authority may by order make provision authorising rights of common to which section 9 applies to be severed permanently from the land to which they are attached by transfer in accordance with that provision.
	(2) Provision under sub-paragraph (1) is to be framed by reference to—
	(a) particular land over which the rights of common are exercisable, or
	(b) particular descriptions of such land,
	and may authorise transfers to particular persons, particular descriptions of persons or any person.
	(3) The appropriate national authority must, before making any provision under sub-paragraph (1) in relation to any land, consult such persons (if any) as it considers represent the interests of—
	(a) persons who own the land;
	(b) persons who exercise rights of common over the land.
	(4) Provision under sub-paragraph (1) must include provision securing that that the owner of any land over which a right of common is exercisable is to be notified, and his consent obtained, before the right may be transferred.
	(5) Provision referred to in sub-paragraph (4) may include provision as to the circumstances in which notification may be regarded as having been given or consent obtained.
	(6) The severance of a right of common by its transfer under provision under sub-paragraph (1)—
	(a) only has effect if the transfer complies with such requirements as to form and content as regulations may provide; and
	(b) does not operate at law until, on an application under this Schedule, the transferee is registered as the owner of the right in the register of common land or of town or village greens in which the right is registered.
	(7) Provision under sub-paragraph (1) may include provision to secure the result that where—
	(a) the person to whom the right of common is transferred is the owner of land to which rights of common are attached, and
	(b) those rights are exercisable over the same land, or substantially the same land, as the right of common being transferred,
	the transferee must, when making an application as specified in sub-paragraph (6)(b), apply to the commons registration authority for the right to be registered as attached to the land referred to in paragraph (a)."

Baroness Turner of Camden: My Lords, Amendment No. 29 is an amendment to Amendment No. 28. Is that not being moved?

Lord Livsey of Talgarth: had given notice of his intention to move Amendment No. 29:
	Line 8, leave out paragraphs (b) and (c).

Lord Livsey of Talgarth: My Lords, I appreciate what has been said, but I did not have the opportunity to say so when the noble Baroness's predecessor was in the Chair, on the contributions made in support of some of the principles of the amendment. The points that were made on Amendments Nos. 32 and 33 on temporary arrangements were not put in quite the way that I would have wished. I shall not move the amendment.

[Amendment No. 29, as an amendment to Amendment No. 28, not moved.]
	[Amendments Nos. 30 to 35, as amendments to Amendment No. 28, not moved.]
	On Question, Amendment No. 28 agreed to.
	Schedule 1 [Rectification of mistakes etc under the 1965 Act]:

Lord Bach: moved Amendment No. 36:
	Page 35, line 32, leave out paragraph (a) and insert—
	"(a) throughout the period of 20 years preceding the date of its provisional registration the land was, by reason of its physical nature, unusable by members of the public for the purposes of lawful sports and pastimes; and"

Lord Bach: My Lords, this amendment responds to amendments tabled by the noble Baroness, Lady Byford, in Committee and on Report, which we agreed to consider further. The amendments relate to paragraph 5 of Schedule 1, which is about the deregistration of town or village greens. The criteria for deregistration are set out in sub-paragraph (3). One of those criteria is that, in the 20 years leading up to the provisional registration of the green in the late 1960s, there must have been some physical impediment to use for the whole of that period.
	Sub-paragraph (3) is not revisiting the issue of whether there was enough evidence of qualifying use during the 20-year period; rather it is concerned with the physical impossibility of there having been such use. For example, the registered land may have actually been occupied by a house and garden during the 20-year period in question. We have concluded that the wording of sub-paragraph (3)(a) is not helpful to its understanding and our amendment is, we hope, clearer. The amendment will clarify that the physical impediment must have been present throughout the 20 years preceding registration, rather than some part of that time. The amendment is not intended to effect any substantive change in policy, but merely to clarify the doubt identified in the amendments tabled at earlier stages. I beg to move.

The Duke of Montrose: My Lords, I express my thanks and those of my noble friend Lady Byford to the Minister for taking on board our worry and bringing forward the amendment, which we support.

On Question, amendment agreed to.
	Schedule 3 [Works: supplementary]:

Lord Bach: moved Amendment No. 37:
	Page 40, line 21, leave out from beginning to "section" and insert "In its application to any works carried out on or after 28th June 2005 but before the day on which section 38(1) above comes into force,"

Lord Bach: My Lords, my next comment may make the noble Lord, Lord Livsey, even more concerned—although he would never say so—about an unholy alliance. Government Amendments Nos. 37 and 39 respond again to concerns raised by the noble Baroness, Lady Byford, and the noble Earl, Lord Peel, on Report about the wider powers in paragraph 6 of Schedule 3 to enforce against works already undertaken on common land before this Bill was introduced into this House on 28 June 2005. I said then that we would give further consideration to this matter. We have done so, and these two amendments are the result.
	We have brought forward these amendments because on reflection we agree that it is not reasonable for the schedule to widen the Section 194 enforcement powers in relation to works undertaken before the introduction of the Bill. Such works are likely to have been undertaken in reliance on the enforcement position set out in the existing Section 194, and we do not think it would be just to allow any person to apply to the county court for enforcement action in such cases.
	I make clear that it remains possible for the parties who can already apply to the county court under Section 194 for enforcement action to do so in relation to works constructed before introduction. These parties are the district, borough or county council or unitary equivalent, the landowner, and anyone else with a legal interest in the common, such as a commoner or the holder of an easement over the land. All these will remain able to apply to the court for enforcement against unlawful works, subject to the existing rule under the Limitation Act 1980 that prevents enforcement action against works undertaken more than 12 years earlier.
	For works undertaken after the introduction of this Bill and before the commencement of Part 3 and associated repeal of Section 194 of the Law of Property Act 1925, the government amendments do not change the current effect of paragraph 6 of Schedule 3. Any person or body will be able to apply to the county court to enforce the Section 194 controls in such cases. And we intend to implement the repeal of Section 194, when that happens in due course, with a saving to preserve all powers to enforce the section in relation to works already undertaken by the date of repeal. When at that point the new Part 3 works control regime comes into force, any person or body will equally be able to apply to the court to enforce the controls under that part.
	We think the government amendments strike the proper balance between providing for better enforcement of the works control regime and protecting the position of land owners, occupiers and others who have undertaken works in reliance on the previous regime.
	The noble Lord, Lord Greaves, may disagree and may speak to his amendment in due course. I think we are agreed that his amendment would neuter the two government amendments. If his amendment were passed, paragraph 6 of Schedule 3 would simply have its current effect. Any person could then apply to the court to enforce Section 194, irrespective of when the works in question were actually undertaken. I beg to move.

Lord Greaves: had given notice of his intention to move, as an amendment to Amendment No. 37, Amendment No. 38:
	Line 2, leave out "on or after 28th June 2005 but"

Lord Greaves: My Lords, I speak to Amendment No. 38, which is in this group and is an amendment to Amendment No. 37.
	We are on the last group of amendments at the end of what has been a gruelling but absolutely fascinating series of meetings of various sorts to discuss this Commons Bill. I think that a lot of us could now pass an examination on the Bill and achieve at least a grade C or even a grade B. We know about all sorts of things that we knew absolutely nothing about before. This has been a fascinating experience and procedure. People say that this is the kind of thing the House of Lords does very well. The House of Lords does lots of things very well but we can be very proud of the work that we have done on the Bill, particularly in Grand Committee—I refer collectively to the Government and the rest of us. It is a much better Bill now than when it started. A huge amount of credit for that should go to the two Ministers who have been involved and their backing team of civil servants—the noble Lord, Lord Bach, and the noble Baroness, Lady Farrington, who approached the Bill in a spirit which allowed Members on all sides of the Committee to contribute. The Bill is much better for that.
	Having said that, it is slightly unfortunate that we end on a note of disagreement and of considerable disappointment at the amendments that the Government are now putting forward. These are new issues and therefore it is not unreasonable to spend a few minutes on them. The Minister said that he did not think it was reasonable to extend the new powers which everybody will have to initiate proceedings in the county court under Section 194 of the relevant Act to remedy encroachment, obstruction and so forth on commons. He did not say why he did not think that was reasonable; he just made that statement. I believe that this issue will be raised in the House of Commons when the Bill goes there and that there will be further discussion on it.
	The Bill very substantially extends the range of people who can initiate action against encroachment on and obstruction of commons; it extends it to anybody at all. So we have the position that applies, for example, on rights of way under the Highways Act whereby any of us can go to the county court and ask it to seek the removal of obstructions even if the local authority and anyone else who might have an interest does not do that. If I remember rightly, that great improvement was introduced in the CROW Bill when it passed through this House. It is certainly a very valuable measure. The measure that I am discussing introduces a similar power in relation to encroachment on commons. That is very welcome. However, the Government are now restricting that power to encroachments which took place on or after 28 June 2005. However, it does not matter when the incident took place, an encroachment is an encroachment, and it is an encroachment now. It is not just the fact that someone put up a fence, built a ditch, erected a shed, created a car park or whatever, perhaps six or seven years ago; that encroachment is an ongoing problem for people today. If the power to remove that encroachment within the past 12 years is still available to the local authority, why should it not also be available to anyone else under this power? It is not clear why that restriction should be put in, and the Government will have to explain that further as the Bill goes through. For the moment, I have tabled this amendment, and I hope that the Government will think again. I recognise that they are not going to do so today, and on that basis I stand merely to put forward the case.
	Finally, since this is the last time that I shall speak on the Bill, I wish it a good passage through the House of Commons. They will find it in a better condition than some of the Bills are in when they start at that end.

Lord Judd: My Lords, I hesitate to intervene at the eleventh hour plus, on a Bill that I have so warmly welcomed and on which so much hard, detailed work has been done by Members on all sides of this House. Like many others who have not been involved in that work, I am deeply impressed, and I believe that it has been the House of Lords at its very best.
	I intervene because I would not like my noble friend to feel that the point that has just been made is limited to the concern of the noble Lord, Lord Greaves. I declare an interest as president of Friends of the Lake District, which represents the CPRE in Cumbria, where we have about 30 per cent of the commons in England. Almost in parentheses, and not only in a personal capacity but as president, I say how warmly the Friends of the Lake District have welcomed this Bill and all the intentions behind it. However, there is some disappointment about the Government's change of mind, and I should report that to this House. There was great enthusiasm about the principle of extending the possibility of taking action to ordinary people and to the public in general. This is seen as a sad step backwards. In Cumbria, there is quite a large problem of encroachment on not just a few, but quite a number of, commons. In one case, there is more than 2 km of barbed wire. Those sorts of things in a real, living community upset people, and they stored great hope on an opportunity for them as ordinary citizens to take action.
	I am always glad when the Government listen and adjust in the light of comments. Will they listen to the observations from those on the front line? As the Bill goes to the Commons for what I hope will be a very smooth passage, perhaps this point could be reconsidered.

Lord Tyler: My Lords, I endorse what has been said by my noble friend Lord Greaves from a different part of the country, and I very much welcome what the noble Lord, Lord Judd, has said about the far north-west, which is also true of the south-west. This is a great opportunity, and I also fully endorse the comments made about the ministerial team and the importance of this legislation. In various capacities I have been looking forward to this Bill for many, many years, and I am delighted to have been involved as a very lowly apprentice in this process. It has been an extraordinarily interesting apprenticeship. I appreciate that in this House it takes about 20 years to learn how to operate, but at least I have made a start on this Bill. I am very appreciative of the way in which the ministerial team and other noble Lords have welcomed a newcomer to this place and given me an opportunity to speak on behalf of some of the people of the south-west, who will undoubtedly benefit from the Bill. It has been a very interesting experience. I also endorse what has been said about the way in which this Bill goes to the other place. I hope that there will be more thought about this issue, which I suspect will be of interest to Members in that place as well.

Lord Livsey of Talgarth: My Lords, I associate with my friend's remarks on behalf of the whole Front Bench and everyone who has participated. We thank the Minister for his patience and also for the assistance of the Bill team; we do appreciate it.

Baroness Byford: My Lords, I am looking around to see whether anyone else wants to come in. I hope that the Minister holds his resolve on this occasion, whatever the Liberals say. We are very grateful to the Minister for bringing back Amendments Nos. 37 and 39 on an issue that was debated very fully earlier on, so I will not go over that ground again. I understand the other views that are held. What is so good about this House is that people hold different views and are not afraid to express them. On this occasion, I hope that the Minister will resist the amendment spoken to by the noble Lord, Lord Greaves, and we are grateful to him for dealing with it in the way that he has. I also add my very brief thanks to everyone who has taken part in the Bill, particularly to the members of the Bill team and to the Ministers.

Lord Bach: My Lords, it is ironic that we should end this Bill on a point of honestly stated disagreement, bearing in mind how hard we have striven to find sensible consensus around the House on its provisions. My noble friend and I are very grateful indeed for all the kind remarks that have been made around the House both to us and to our officials. I, too, think that the Bill has improved dramatically since it first came to this House, and that is in large measure due to the interest and the opinions expressed by the opposition parties and by noble Lords from the Cross Benches. I am sure that the noble Lord, Lord Greaves, is right that the Bill does leave the House in a much better frame than it would have done had it not been amended and agreed accordingly. I am sorry that we cannot agree with the noble Lord, Lord Greaves, on his amendment; I have already expressed why we cannot. On that note, I thank everyone who has taken part in the Bill in this House.

[Amendment No. 38, as an amendment to Amendment No. 37, not moved.]
	On Question, Amendment No. 37 agreed to.

Lord Bach: moved Amendment No. 39:
	Page 40, line 22, leave out from "shall" to "have" in line 23.
	On Question, amendment agreed to.
	An amendment (privilege) made.

Lord Bach: My Lords, I beg to move that this Bill do now pass.
	Moved, That the Bill do now pass.—(Lord Bach.)

Lord Williams of Elvel: My Lords, we used to have in this House a debate on the Motion that the Bill do now pass. Sometimes it was known as "Fourth Reading", but it was not in any sense a fourth reading. All the tributes that I understand have been paid now to the Minister came up under the amendment spoken to by the noble Lord, Lord Greaves. It seems odd to me that no one speaks on the Motion that the Bill do now pass. This is the time when the Bill has now been done, and we do not have any particular problems. We all accept that this Bill has gone through this House and has been debated—I will not say endlessly—at some length, both in Committee and on Report.
	I am most grateful to the noble Baroness, Lady Byford, and the noble Duke, the Duke of Montrose, who have been very persuasive in their arguments, and the noble Lord, Lord Livsey, who has spoken very much for the Welsh interest, as I have tried to do. Above all, I am grateful to my noble friend Lord Bach, who has been an absolutely brilliant Minister on this. We have had all sorts of advice and plenty of documentation, as my noble friend led us through the various amendments that the Government produced—as well as the arguments on the opposition amendments.
	Although it is an awful cliché, this has been the House of Lords at its best. But I really want to congratulate my noble friends Lord Bach and Lady Farrington, because they have been exemplary in their patience and intelligence. I also congratulate their support staff, who I am not allowed to mention, but who sit on my left and contribute endlessly to the pigeons that arrive at the Dispatch Box.
	I am grateful to the House, my noble friends, the noble Baroness, Lady Byford, the noble Lord, Lord Livsey, and others, because this has been a good experience in how a Bill should be considered in this House.

Lord Chorley: My Lords, I was brought up like the noble Lord, Lord Williams of Elvel, perhaps because I have been here a long time, more than the 20 years of the noble Lord, Lord Tyler. I echo everything that the noble Lord, Lord Williams, and noble Lords on the Front Benches have said, about the way that the Bill has been put through by the noble Lord, Lord Bach, the noble Baroness, Lady Farrington, and the team behind them. It has been an exemplary experience on a highly technical Bill. It is a much better Bill than when it started.

Lord Bach: My Lords, I thank both noble Lords for their most kind remarks.
	On Question, Bill passed, and sent to the Commons with amendments.

Consumer Credit Bill

Report received.
	Clause 7 [Further provision relating to statements]

Lord Sainsbury of Turville: moved Amendment No. 1:
	Page 6, line 9, leave out "his" and insert "the debtor's"

Lord Sainsbury of Turville: My Lords, the Government believe that it is necessary to modify the wording of the new subsection (2) in Clause 7(3). The clause deals with agreements with multiple debtors and allows all but one of the debtors who are party to an agreement to waive their right to receive certain statements under the 1974 Act as amended.
	The Bill will permit multiple debtors to provide the creditor with a dispensing notice such that the creditor will be required to send out only one copy of each notice or statement required by the Bill under new Section 77A, which deals with annual statements, or Section 78 of the 1974 Act, which deals with running account credit statements. The last line of the new Section 185(2) as currently drafted "authorises him"—the creditor—
	"not to comply in his case",
	which could be read as referring to the creditor, "with section 77A", and so on. Since the clause is not clear as currently drafted, the Government propose to amend this to read, "authorises him"—the creditor—
	"not to comply in the debtor's case with section 77A",
	and so on, to make that absolutely clear. I beg to move.

Baroness Miller of Hendon: My Lords, we certainly agree with that suggestion.

Lord Razzall: My Lords, I obviously agree, as my name appears next to the noble Lord's.

On Question, amendment agreed to.
	Clause 19 [Unfair relationships between creditors and debtors]:

Baroness Miller of Hendon: moved Amendment No. 2:
	Page 14, line 16, at end insert—
	"( ) Regulations may make provision indicating the circumstances in which the relationship between the creditor and debtor may be regarded as unfair."

Baroness Miller of Hendon: My Lords, in moving the amendment, I shall also speak to Amendments Nos. 3 and 4. They amend Clause 19, which relates to unfair relationships between creditors and debtors. They are different from my other amendment to Clause 19, which I shall move separately, because this little group of three amendments relates to the definition of an unfair relationship, whereas Amendment No. 5 involves an important and vital duty of the creditor towards the debtor.
	Amendment No. 2 empowers the Secretary of State to make regulations specifying that this or that practice is automatically to be deemed unfair. As drafted, the clause is, as the Minister conceded in Committee, deliberately unspecific in order to leave it to the court to decide whether the creditor had been unfair. Your Lordships may recall a notice that used to appear on London buses:
	"Small dogs may be carried at the discretion of the conductor".
	The question was always, how small is a small dog? The answer always was acknowledged to be whatever size the conductor said. How long is a piece of string? I entirely agree with the objective of being as unspecific as possible because it is impossible to define every unfair practice, and because a list of malpractices in the Bill might infer that whatever is not expressly prohibited is permitted.
	The ingenuity of bad lenders in dreaming up new schemes or scams is so extensive that we cannot allow matters to be set in legislative concrete. On the other hand, if there is a practice which is clearly unfair or undesirable, there is no reason why the Secretary of State should not say so in a regulation approved by Parliament to protect debtors, and to avoid the necessity of them having to go to court for protection.
	We have to bear in mind that the debtor is almost inevitably in a weaker position, and because of that, and possibly through ignorance of his rights, he may simply find himself liable for a debt that he should not be intimidated from contesting. With vast swathes of legislation going back over centuries, not only has the law been interpreted by judges, but the same judges have made rulings on the facts. In almost every case, the judge has to decide whether he believes one side or the other, or whose version of the facts is correct.
	Therefore, I have no objection to decisions left to the court about whether the terms are unfair in a particular case. But one of the objectives of the Bill should be to prevent cases coming to court in the first place. That would be achieved if, in the case of some scheme involving a serious malpractice, the Secretary of State could cut it off at the root without waiting for the outcome of some drawn-out piece of litigation, or for it to continue for too long simply because there is no debtor with the resources to contest it. I emphasise that the amendment does not detract in any way from the flexibility desired by the Government regarding the interpretation of unfairness. It simply enables the Secretary of State to say so when something manifestly is unfair.
	The noble Lord, Lord Razzall, has indicated his support for the amendment, and I am very grateful to him. Perhaps that alone will persuade the Minister that this constructive provision has wide support.
	Amendment No. 3 simply requires that the terms on which a creditor seeks to rely be written in plain intelligible language—intelligible, that is, to the debtor, and not necessarily to a member of the Chancery Bar. It will still be up to the court to decide whether the language of the agreement is clear and intelligible. Leaving aside the fact that the terms applying to many credit cards and store cards are often printed in microscopic typefaces, the lowest standard that should apply should be that those terms be readily understandable by the debtor.
	In legislation governing credit terms—for example, hire purchase—the law stipulates that certain provisions must be printed no less legibly than the rest of the document. There is no point in printing legibly if they are also legal gobbledegook. Amendment No. 3 does not add any burden or give any problem to any lender who is acting with integrity. Amendment No. 4 has a corollary which entails the alteration of the burden of proof. It is right and proper that if a term of a credit agreement has been expressed in clear, intelligible language, the ordinary rule should apply—if you sign something, you are bound by it.
	Voltaire once said:
	"God is always on the side of the big battalions".
	This group of amendments is designed to prevent some of the excellent provisions of the Bill becoming the subject of endless litigation in cases where the creditors enjoy an economic advantage of deeper pockets and more resources than the individual debtors. I beg to move.

Lord Razzall: My Lords, as the Minister will be aware, we had extensive discussions on this and a number of related points in Grand Committee. Of course, a number of the amendments that we discussed then have been brought back to the House on Report. I will not speak for very long on this item, because I hope that the Minister will be able to give some indication that he has thought about the points that were made in Committee. As he will be aware, the over-arching thrust of the comments that have been made both from the Conservative Benches and from the Liberal Democrat Benches reflects the concern that these issues should not simply be left to the court.
	To put the matter simply, there are three alternatives: first, that the Government make provision either in the Bill or through regulations, as the noble Baroness proposes, on what is to be regarded as an unfair practice; secondly, that the matter is left to the Office of Fair Trading; or, thirdly, that it is left to the courts. The Government take the view, I think, that the matter should be left to the courts on the basis of guidance from the OFT. However, I think that it would be helpful before we move on to other amendments if the Minister could indicate where the Government, having listened to what we all said in Committee, will come down on whether the matter should be dealt with through legislation—either in the Bill or by regulations—through the OFT or simply through the courts.

Lord Beaumont of Whitley: My Lords, I must apologise for coming in so late on this Bill. My only excuse is that, as my party's only spokesman in this House, I have to cover all the legislation that comes to us and it is not always easy to catch up with it in time. If I had been able to put down my Amendment No. 3A earlier, I have no doubt that it would have been grouped for debate with these amendments, as it deals with the same point, although it goes into considerably more detail and, indeed, goes further.
	I very much welcome the amendment that has just been spoken to. Whether I go on to move Amendment No. 3A depends very much on whether the Government's reply deals with the points that my amendment raises. I think that there is a strong case for including in the Bill the various matters that I have covered in my amendment, especially the extent to which the personal and financial circumstances, health and literacy of the debtor are taken into account by the creditor. However, I will wait to hear what the Minister has to say.

Lord Borrie: My Lords, I regret that I was unable to attend Committee and therefore have not been able to speak on the important matter of Clause 19 and amendments to it. To my mind, Clause 19 is an extremely welcome change from the unworkable clause concerning extortionate credit agreements in the 1974 Act. I think that there is common agreement in the House on that. The hurdles for the debtor to prove an extortionate credit agreement were far too high. Indeed, I notice that a notable Conservative financier—the noble Lord, Lord Griffiths of Fforestfach, who was chairman of a commission on personal debt—took the same view in the report that was published a few months ago.
	Clause 19 covers any term or any conduct of the creditor that is unfair to the debtor. Its intention—if we leave aside the amendments for the moment—is that it should be for the courts to consider the circumstances in any particular case and to determine whether the creditor/debtor relationship is unfair. I see the amendment as having laudable objectives to make more certain and clearer to creditors what the circumstances may be in which a creditor/debtor relationship should be treated as unfair. As the Bill stands, the meaning of "unfair" is, as I suppose the noble Baroness would say, as broad as it is long. It is left entirely to litigation through the courts, which is inevitably haphazard as to whether it provides useful precedents, to determine in the circumstances of any particular case whether a relationship is unfair.
	Consumer organisations and others have, over the years, described a considerable number of situations in which either the terms of the agreement or the way in which the creditor behaved to the debtor were harsh and unfair and the creditor ought to have been penalised. The noble Baroness, Lady Miller of Hendon, may think that these situations can be picked out from the examples that have been produced over the years and listed in regulations as amounting to unfair conduct or behaviour. The trouble is that how harsh or unfair such terms or conduct may be often depends on the particular circumstances of the creditor and debtor concerned. Regulations could not, I submit, specify all the possible circumstances and variations that might arise. Moreover, regulations would never be up-to-date because, unfortunately, creditors—or at least the worst kind of creditors—can be amazingly imaginative in developing fresh forms of harshness and unfairness. Further, if you list types of unfairness in legislative form, a court might well jump to the conclusion that other terms and types of conduct which are arguably unfair are not unfair.
	The Bill, rightly in my view, wants the court to look at the creditor/debtor relationship as a whole without being biased in one way or another by a regulatory list. Flexibility is needed. I call in aid two more Conservative Peers, as they are members of the Joint Committee on Human Rights—namely, the noble Lord, Lord Bowness, and the noble Lord, Lord Campbell of Alloway. In the report published in October on this Bill, they make the point that,
	"some laws are required 'by their subject matter' to be flexible".
	They say, as members of the House of Lords and House of Commons Joint Committee on Human Rights:
	"We consider that the subject matter of the present law, namely consumer protection in the context of credit agreements, is such as to require a degree of flexibility".
	They go on to make two other relevant points—I apologise for summarising them, but it is all set out in the report. They say that suitable guidance is available as to the meaning of the word "fair" in case law interpreting the same term in other closely analogous statutory contexts, which they set out. They also make the point that creditors of all kinds who may be affected by the law can be expected to obtain their own legal advice as to which way a court might go on any particular relationship that the creditor has with a debtor.
	I am sorry to go on at some length but perhaps I may just mention Amendment No. 3, which is linked with this. I do not really see value in saying specifically that plain, intelligible language should be used because, if the language is not plain and intelligible, the relationship between the creditor and the debtor is likely to be unfair. But if the language is plain and intelligible, the relationship may still be unfair.
	Amendment No. 4 is undesirable because it is much more consistent to say that the burden should always be on the creditor to prove that the relationship alleged to be unfair is fair in all the circumstances. Incidentally—this is a small point—why does Amendment No. 3 refer to the terms being "plain" and "intelligible" and Amendment No. 4 "clear" and "intelligible"? Perhaps they are meant to be the same.

Lord Freeman: My Lords, like the noble Lord, Lord Borrie, I also regret not having been present in Grand Committee but I cannot agree with his arguments. I strongly support my noble friend Lady Miller in Amendments Nos. 2, 3 and 4, and I speak from past experience as the Minister responsible in the previous government for what was then called the Deregulation Task Force and is now called the Better Regulation Task Force.
	One of my main reasons for strongly supporting the amendments is that the principles of good regulation should always be adhered to, even though some flexibility may be lost. I understand the strength of the argument but, on balance, I believe that the first principle of good regulation is, as is covered in Amendment No. 2, that the regulations may make provision indicating the circumstances. I believe that one needs to be as certain as possible, in protection of both the creditor and the debtor, in stating what is unfair in the relationship. In this instance, I do not think that reliance on court interpretation is correct. In my judgment, consistency and certainty are more important to protect the interests of both borrower and lender.
	Finally, the second principle is enshrined in Amendments Nos. 3 and 4 by referring to the need for plain, intelligible language. I welcome that. For those reasons, I support Amendments Nos. 2, 3 and 4.

Lord Sainsbury of Turville: My Lords, the noble Baroness, Lady Miller, has tabled three amendments, Amendments Nos. 2 to 4, on the unfair relationships test in Clause 19 of the Bill. They are in the same form as those considered in Grand Committee. I am afraid that I shall be dealing with them at length because they are central to the whole approach to the Bill but I shall certainly try not to speak at such length later in the evening.
	The noble Baroness, Lady Miller, said in Grand Committee that the purpose of the amendments was to "put some clothes" on the provisions,
	"without interfering with the concept of generally leaving matters to the court in all cases".—[Official Report, 8/11/05; col. GC 157.]
	Having considered the arguments put by noble Lords on the opposition Benches and by other interested groups, we remain of the view that amendments such as these will interfere with the "general concept", as the noble Baroness described it, in a way that we consider to be unduly restrictive and which ultimately could be harmful to consumers.
	At this point, perhaps I may say that my noble friend Lord Borrie stated our position very clearly and I should probably just sit down and leave it to him. Of course, it is proper for me to put the government view clearly but I think that he stated it extremely well.
	This matter gave rise to some debate in Grand Committee, but, on the basis of their remarks in Grand Committee, I note that noble Lords on the opposition Benches appear to accept the underlying principle of the provisions—that there should be a new test based around the concept of unfair credit relationships.
	Much of what noble Lords on the opposition Benches have said about the new test is concerned with issues of business uncertainty and risk. The Government believe—for the reasons that my honourable friend the Minister in the other place and I have made clear—that business has a considerable amount of guidance about the specific types of conduct that are generally regarded as unfair, given the existence of current and forthcoming legislation on unfair contract terms and unfair commercial practices. Furthermore, business would not benefit from government intervention to protect it from risk.
	Lenders have to look beyond simply complying with procedural rules to ensuring that the substance of the relationship is not unfair, and it is clearly in their business interests to do so. It is possible to lend fairly to anyone. It simply requires the lender to ensure that the relationship with the consumer, in the particular case, is not unfair when considered as a whole. That is an assessment that a lender is best placed to make, not government.
	By way of general remarks, perhaps I may remind noble Lords what Citizens Advice—one of the most respected organisations in this field—said before Second Reading:
	"Citizens Advice would be very concerned if the Bill were to be amended to seek to define the word 'unfair' in a manner that restricts its ordinary and popular sense. We consider that this is the main benefit of the new test".
	I shall now address the noble Baroness's amendments in turn. As I made clear in Grand Committee, the Government do not think that the approach set out in Amendment No. 2 is practicable and believe that it would seriously undermine the effectiveness of the unfair relationships provisions. We believe that a list that attempted to indicate or identify unfair relationships would, in practice, encourage lenders to think that, provided something was listed, everything else was all right. Encouraging this sort of "tick-box" mentality among lenders would allow some to go on thinking that, so long as they complied with formal procedural rules, they could ignore the substance of credit relationships. This test is about the substance, and not simply the form, of credit relationships.
	We believe that the amendment misses the point that the test is about making business acknowledge and manage its own risk and not sub-contracting that job to government. The role of this legislation is to reduce the risks for consumers in obtaining credit, not to eliminate it for business.
	We believe that the amendment proceeds on the erroneous view that, simply because some specific practice occurs or a circumstance exists, there will be an unfair relationship in all cases. All credit relationships are different. The test is designed to allow the court the necessary degree of flexibility to consider all relevant circumstances and then to make a decision about the nature of the relationship in an individual case. As soon as one embarks on the process of attempting to put together an exhaustive list of unfair practices, one must recognise the impossibility of completing such a process and, indeed, its futility.
	We believe that such an approach would have the consequence of unjustifiably stigmatising conduct that may be perfectly fair and reasonable in some cases but not in others. That would limit business's ability to deal with customers in ways that are suitable for the specific customer's situation and the court's ability to ensure fairness in all cases that come before it.
	Moreover, we believe that the noble Baroness's amendment is largely redundant. There are several relevant lists of things telling lenders what not to do when dealing with consumers. Lenders need only look at the Consumer Credit Act itself, the regulations on unfair terms in consumer contracts, the new Unfair Commercial Practices Directive and the domestic legislation that will flow from that, on which the department is currently consulting, and other laws and regulations which regulate the interaction of businesses with consumers, such as those dealing with trade descriptions or fair trading, to know what sorts of specific practices they should avoid. Business does not need another list of specific things. But, as I said, such lists cannot define "unfair relationships". For those reasons, the Government do not believe that Amendment No. 2 will work.
	The next amendment in this group—Amendment No. 3—would allow the courts to have regard to whether the agreement was in plain and intelligible language. We remain unconvinced of a need to amend the clause in this way. I have already explained the Government's position on elevating some particular issue or factor to significance. The amendment seeks to do that in relation to the "plainness" or "intelligibility" of agreements. I shall not set out again why we believe that this is unnecessary and cannot work.
	We have already introduced requirements specifying the form and content of agreements in regulations made in 2004. Failure to comply with those renders the agreement potentially unenforceable. So credit agreements must comply with specific criteria before they can be used. It is therefore difficult to understand what the amendment adds to the test as the court can have regard to the form and content of the agreement in any event and it can impose remedies if the agreement fails to comply.
	Furthermore, in addition to its redundancy, the amendment gives rise to a wider issue as to what significance "plain" and "intelligible" are to have. Simply having an agreement in plain and intelligible language does not make a credit relationship fair; nor does it necessarily indicate fairness. Lenders can rip off consumers with the plainest and most intelligible of agreements. This amendment does not acknowledge, or do anything about, that simple fact.
	The Government believe that transparency is important and consumers should be able to understand credit products easily. Lenders are required under the 1974 Act to have agreements that comply with the specific transparency requirements in all circumstances. Indeed, it is these requirements that are designed to make agreements "plain" and "intelligible" to consumers by making them transparent. So the problem of drafting complexity is one of the many that the Government are already tackling in their reforms to the United Kingdom's consumer credit laws. Therefore, we believe that Amendment No. 3 is not helpful. It does not add anything to the test or the requirements imposed in relation to the form and content of agreements.
	The Government's concerns about Amendment No. 3 apply equally to Amendment No. 4, which is the next amendment in this group. The noble Baroness's amendment seeks to put the burden of proof on the debtor who has raised the issue of an unfair relationship in relation to those agreements where the court concludes that the agreement was in "clear and intelligible language". Clause 20(10) of the Bill provides that the debtor must allege that an unfair relationship exists, before the creditor must show that it does not. This reflects the approach of the current legislation. Under the existing extortionate credit test, the burden of proving that the credit bargain is not extortionate lies with the creditor and we are not changing this approach. But we are not simply copying the existing legislation for its own sake.
	We consider that the position on the burden of proof set out here is essential. It will serve to ensure that debtors are not prevented, through the weight of procedural and evidential burdens inherent in litigation, from bringing a case under the unfair relationships test. Amendment No. 4 would impose a new hurdle for debtors that has little to do with the substance of the relationship, but it is the substance of the relationship that we wish the court to consider.
	The amendment also seems to be based on a concern, which in the Government's view is misplaced, that a debtor who simply alleges an unfair relationship, with no evidence, can succeed in his claim. The debtor will need to base his claim on some evidence; he will need to provide information as part of the procedural steps to support his claim. A court is highly unlikely to entertain cases where allegations made by a debtor are not backed by evidence of any substance but only by assertions. We do not believe that this amendment will work and it will actually be very unhelpful.
	Amendments Nos. 2 to 4 highlight important issues in relation to the unfair relationships test. It is right that noble Lords should seek to debate the test and how it will work. The Government are confident that the test is right. In saying that, I reiterate the point that I have made throughout this debate, that the new test must be looked at in its context. For that reason, the Government are not convinced of the need to change these provisions.
	However, the Government have listened to the arguments made by noble Lords. In Grand Committee, noble Lords will recall that the noble Lord, Lord Razzall, raised the possibility that the Government could ensure that the unfair relationships provisions do not commence until such time as the Office of Fair Trading publishes the guidance required by Clause 22 of the Bill. Indeed, the noble Lord suggested that this was a necessary consequence of the Government's rejection of other proposals to amend the provisions.
	So as to be clear, the guidance required by Clause 22 would not define unfair relationships and given the office's role as a regulator, nor can it. It will provide guidance on circumstances and the manner in which the Office of Fair Trading would exercise its powers to take action against one or more lenders for entering into unfair relationships which harm the collective interests of consumers in the UK under its powers in Part 8 of the Enterprise Act 2002. As I have said, this guidance will not define unfair relationships, but it would include an indication of the things that it considers may give rise to OFT enforcement action under Part 8. As such, it could serve industry as a broad marker of conduct that gives rise to a general risk of challenge.
	To assuage the concerns of some noble Lords on this issue—most notably as articulated by the noble Lord, Lord Razzall, in Grand Committee—I am prepared to make a commitment not to commence the provisions until such time as the OFT guidance, as required by Clause 22(1) of the Bill, is published. This will not require any amendment to the Bill, and it is in keeping with the approach adopted in relation to the Enterprise Act 2002. Indeed it would be inappropriate to make such a linkage between the guidance and the test in the legislation, as this could serve to give the guidance significance in relation to the general application of the unfair relationships test that it should not have.
	The Enterprise Bill passed through your Lordships' House in 2002, and noble Lords may recall that I led for the Government in those debates. This did not require any change to the Bill in that case and I gave a commitment to the House that this would occur, which noble Lords accepted. The provisions were then commenced at a time immediately after the publication of the relevant guidance. Therefore, the Government are prepared to commit to not commencing the provisions until such time as the OFT guidance, as required by Clause 22(1) of the Bill, is published, but it is not necessary to amend the Bill to achieve this. On this basis, I ask the noble Baroness not to press Amendments Nos. 2 to 4.

Baroness Miller of Hendon: My Lords, I thank the Minister for his very detailed reply to my amendments. In particular, I thank him for his commitment that the provisions will not come into force until the OFT has published its guidance. I am certain that the noble Lord, Lord Razzall, will be delighted about that as it was his suggestion. I also thank the noble Lords, Lord Razzall and Lord Beaumont of Whitley, and my noble friend Lord Freeman for the support that they have given me on these amendments. The noble Lord, Lord Borrie, started off speaking very nicely about my amendments, but it soon became clear that he was not supporting them. However, I believe he acknowledged the need—I do not remember his exact words—for a closer definition of what is meant. I took some comfort from that.
	In saying how unnecessary these amendments are, the Minister prayed in aid the brief that he received from Citizens Advice. I am sure he would acknowledge that, as good as that was, there were also many other briefs that said completely the opposite. I do not think that point should necessarily hold sway.
	The Minister also mentioned the unfair contract terms that can be looked at by debtors. If that is so, I cannot see any real reason why they cannot be put into regulations. Having said that, the Minister has asked us to withdraw the amendment which I most certainly will do, but it is right to say that I reserve my position for Third Reading. I am well aware that we do not bring matters back at Third Reading but, equally, the Minister will know that this was discussed in Grand Committee where we could not put it to a vote. This is Report stage and I understand that my Chief Whip has agreed that we should not divide today either as a photograph is being taken to commemorate 100 years of the Peers' Labour Party. I hope the photo is excellent, but I want to ensure that we reserve our position. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 3 not moved.]

Lord Beaumont of Whitley: moved Amendment No. 3A:
	Page 14, line 19, at end insert—
	"( ) Matters which the court thinks relevant under subsection (2) may include—
	(a) the personal and financial circumstances of the debtor;
	(b) the health of the debtor;
	(c) the literacy of the debtor,
	and the extent to which these matters were taken into account by the creditor."

Lord Beaumont of Whitley: My Lords, the object of the amendment is to put on the face of the Bill considerations that some noble Lords may have read in a letter from the Zaccheus 2000 Trust in the Independent today. The purpose of the amendment is to inject into the Bill some certainty that the circumstances of vulnerable households will be taken into account when the courts consider a determination on Clause 19, unfair relationships. I move the amendment so that the case I am putting is recorded in Hansard and so should be able to be taken into consideration when the Government come to consider these matters as they have promised to do under a later clause.
	There have been rich pickings for 30 years despite the law, with legal door-to-door companies such as Provident plc regularly lending £1,000 with £700 interest repayable over a year to unemployed parents who receive income support at levels below the Government's poverty thresholds. They are in poverty; they are desperate at Christmas time or when buying school clothes, and often have other debts. They turn to any port in a storm, never questioning whether the terms of the loan are unfair. There is no certainty in the Bill that those circumstances will ever be taken into account when courts are determining the meaning of "unfair relationships".
	My amendment requires a court to have regard to the personal and financial circumstances, health and literacy of the borrower, and the extent to which these matters were taken into account by the lender. The Bill requires courts to have regard to all relevant matters. Unfortunately, as noble Lords have said, it is far from clear what a relevant matter may be—a problem which also exists with the concept of extortionate bargains, which the Consumer Credit Bill is set to repeal.
	There are two different approaches. The court may take a narrow approach on the meaning of "unfair relationship", or a wider one. On the narrower approach, the court may consider itself limited to the solely commercial aspects of the loan, such as interest rates, credit charges, the overall amount paid for credit and repayment issues. The bargain may be considered solely in commercial terms, determined by banking and market practice and the terms of the contract itself. The blanket freedom to contract on any terms at common law and the rules of statutory interpretation would be the ultimate fall-back position for lenders and credit brokers, and has the potential to generate much argument. That would undoubtedly be the meaning that the expensive lawyers of the credit industry will maintain was the true intention of Parliament in any test of legislation, unless Parliament is prepared to state otherwise.
	A wider approach by the court could encompass such things as capacity, bargaining power of the parties, the income, expenditure and debts of the borrower, poverty, age and disability at the time the contract was made, effects on third parties—such as spouses and children—and the extent to which a lender should have taken these into consideration. It might cover the deemed or actual knowledge of the lender. Then the social goals and aims in protecting vulnerable consumers, their families and the consequences of enforcement upon them, would be considered.
	Few consumers, citizens advice bureaux or local solicitors would be equipped to deal with such arguments in a contested hearing if the court is not required to take them into account. Legal aid is granted on the assumption that there is a chance of winning the case, and is hard to come by under the provisions of the Legal Services Commission.
	The practical difficulty is that cases involving unfair relationships will vary immensely on the facts. Although terms and conditions may be standardised, the circumstances of each consumer will differ. Which circumstances will be considered relevant? Uncertainty over the scope of the judge's powers in such a case will mean subjective value judgments and assessments of the consumer will inevitably impinge on the exercise of the court's discretion. This runs contrary to one of the basic principles in the law of contract: the creation of certainty in business relationships.
	Coldunell Ltd v Gallon was a Court of Appeal decision on the meaning of extortionate credit bargains. The defendant's son, a man in his fifties, borrowed money with his elderly parents of 86 and 91 providing security of their home for a short-term loan at 20 per cent interest. The plaintiff's managing director was aware of the son's position, but made no inquiries about the position of the parents and instructed solicitors to make arrangements. The parents received no independent advice and signed the contract. The son defaulted after four payments of interest had been made, thus having paid 80 per cent interest on the loan. The plaintiffs sought payment on the loan and the interest or, failing that, possession. The county court discharged the debt, accepting that the signature had been obtained by undue influence from the son, tainting the lender's transaction. The court further decided that the bargain was not extortionate.
	At the Court of Appeal, it was held that the bargain was a proper commercial bargain, in which the lenders had acted like ordinary commercial lenders; and that a lender could not be expected to do more than properly and fairly point out to a guarantor the desirability of obtaining independent advice, and to require that the documents be executed in the presence of another. To expect a lender to ensure that the guarantor obtained legal advice, and to guard against the interception of the documents, would have extended the established principles to a dangerous extent that was not warranted. As a consequence, the elderly couple were forced to sell their home. From the way in which the Consumer Credit Bill is currently drafted, one cannot determine whether the facts would be cast as an unfair relationship or not.
	Working out valid legal principles to determine which matters might be relevant when deciding which contracts should be considered extortionate has proved very difficult, and is likely to be just as difficult in the new test of unfair relationships. If a parliamentary committee drafting the law cannot determine the issue at this stage, can an answer be expected from the county court? Unless Parliament clearly indicates that its intention is to protect people in vulnerable situations, within the legislation, there is every possibility that the legislation may be interpreted in a narrow way, and important considerations overlooked in the operation of the system in the county court.
	Both the Green and White Papers on the future of civil enforcement express the intention to protect vulnerable people from excessive enforcement. It would be consistent with this aim to make statutory provision enabling a court to identify a party as vulnerable at an early stage, and to take appropriate action.
	We often include the concept of reasonableness in legislation which passes through your Lordships' House, and it has not always proved to be enforceable in the courts. There is no certainty in this Bill that vulnerable borrowers will be protected. Likewise, there is no certainty that courts will oblige the Government by filling the legal lacuna of "unfair relationships" that has been created in Clause 19. I beg to move.

Lord Razzall: My Lords, the noble Lord, Lord Beaumont of Whitley, is correct that if this amendment had been tabled earlier it would have been grouped with Amendments Nos. 2, 3 and 4, which we have just discussed; the substance of his point is that of that debate.
	As I said on the previous amendment, it became clear when we discussed these matters in Grand Committee that there were only four options for dealing with "unfair relationship": first, as proposed by the noble Lord, Lord Beaumont of Whitley, there should be an attempt to define "unfair relationship" in the Bill; secondly, as was the approach of the amendments in the last group, the definition should be through regulation, coming back to the House; thirdly, it should be left substantially to guidance from the Office of Fair Trading; and, fourthly, that it should be left entirely to the courts.
	We have debated that at considerable length. The Government's position is clearly that of a combination of the third and fourth options—substantial guidance from the OFT and thereafter to the courts—and that it is not a matter for either the Bill or regulation. I indicated in Grand Committee that I shared the view of the Conservative Benches and the noble Lord, Lord Beaumont of Whitley, that this should be dealt with either by the Bill or in regulations. Having extracted the generous concession from the Minister on getting OFT guidance out before this Bill comes into force, it would be churlish of me to continue the argument at this stage. Much as I would like to support the noble Lord, Lord Beaumont of Whitley, I think that we ought perhaps to reflect on what the Minister said about the timing of OFT guidance in relation to the Bill coming into effect. Therefore, I am afraid that I cannot support the noble Lord's amendment tonight.

Lord Sainsbury of Turville: My Lords, I have outlined why the Government believe that amendments—including those tabled by the noble Baroness, Lady Miller of Hendon—which attempt to define "unfair relationship" will not work.
	This amendment, tabled by the noble Lord, Lord Beaumont of Whitley, seeks to compel the court to have regard to specific things which are considered to be important in the context of vulnerable borrowers. This attempts to come at the issue raised previously by noble Lords from another angle: that of the vulnerable consumer. I make the general point that if a debtor raises an issue, the court may consider it, so any matter may be relevant. That deals with the points that the noble Lord, Lord Beaumont, is making.
	The amendment is based on an opinion prepared by Mr Alan Murdie in relation to the unfair relationships provisions of the Bill, and was provided to noble Lords by the Zacchaeus 2000 Trust, of which he is a trustee. The trust is actively concerned to improve the lot of the vulnerable in British society, not merely in relation to debt issues but across a range of important social issues. Its work in drawing our attention to these issues is to be commended. However, neither Mr Murdie's opinion nor the amendment tabled by the noble Lord, Lord Beaumont of Whitley, cause the Government to alter their position on the provisions.
	I explained in Grand Committee why the Government have adopted their position. I have also set out why we do not accept Amendments Nos. 2, 3 and 4, tabled by noble Lords on the opposition Benches. The position outlined in Mr Murdie's opinion is no different in practical effect, in the Government's view, to the types of approaches suggested by the noble Lord and other noble Lords on the Benches opposite, and for the same reasons, we do not believe that such an approach is appropriate.

Lord Beaumont of Whitley: My Lords, I thank the noble Lords who have spoken. I also thank the Minister for his reply. I have achieved my object of getting into Hansard the case I thought important to put. I have spelled it out fully and went a little further than other noble Lords did in their amendments. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 4 not moved.]

Baroness Miller of Hendon: moved Amendment No. 5:
	Page 14, line 29, at end insert—
	"140AA DUTY OF CREDITORS
	(1) Except as provided in subsections (2) and (3), this section relates to any credit agreement governed by this Act.
	(2) Before opening an account or entering into a credit agreement including—
	(a) the increase or extension of any existing agreement;
	(b) the original issue of a credit card (but not its renewal); or
	(c) the increase of any credit limit on a credit card,
	it shall be the duty of the creditor to ascertain the ability of the intended debtor as at that date to meet his obligations thereunder, taking into account any other actual (but not contingent) obligations he may have.
	(3) A creditor shall be deemed to have satisfied his obligations under subsection (2) if prior to making the agreement he has made such enquiries as may be reasonable and available in the circumstances.
	(4) The Data Protection Registrar may make and from time to time amend such rules as he deems appropriate to enable or facilitate the provision or exchange of information by or between creditors and potential creditors in relation to an intended new credit agreement or an extension or increase of an existing agreement.
	(5) In the event of the failure of a creditor to comply with the provisions of this section, any resulting agreement shall be presumed to have been entered into as a consequence of an "unfair relationship" within the meaning of section 140A, but such presumption may be controverted in appropriate cases.""

Baroness Miller of Hendon: My Lords, this amendment is similar to one that I tabled in Committee. In simple terms, it places an obligation on creditors whose activities are governed by the Act to ensure that the proposed debtor has the means to meet the obligations he is taking on. In Committee, I could not press it and, in any event, I wanted to consider the objection that the Minister had to my original amendment.
	Our Chief Whip has just told me—in our little chat a moment ago, when I nearly missed saying "not moved" on Amendment No. 4—that although we thought that the prohibition against voting tonight would end at 7.10 pm, when the photograph was to be complete, so many noble Lords are going out to have dinner that he has agreed with the noble Lord, Lord Grocott, that we shall not vote for the rest of the evening. Under these circumstances, we reserve our position on all the amendments because, if we do not, and we cannot bring them back at Third Reading, we will not have been able to vote on them anywhere: not in Grand Committee, not on Report and, as is the custom, not on more than one of them at Third Reading.
	I hope the Minister will be gratified to note that I have taken his specific objection fully into account and have modified my amendment in the light of his comments. Originally, I suggested exempting clearing banks, building societies and housing associations, small hire-purchase agreements and loans by individuals or pawnbrokers. However, the Minister complained that that would create,
	"categories of lenders who might be regarded as 'good' and . . . those . . . who are 'not so good'".—[Official Report, 8/11/05; col. GC163.]
	Well, far be it from me to be so judgmental. I came to the conclusion that I could accommodate his objection, not because I agreed with it, but by tarring all creditors with the same brush, as the Government desire. This is because I believe that the type of creditor whom I wanted to exempt from the not-very-onerous provisions of the new clause was following that desirable, indeed, essential practice in any case.
	The amendment introduces a new section in the 1974 Act that my marginal note describes as the "duty of creditors". In essence, the duty it imposes on creditors is the simple, sensible and appropriate one of requiring them to make inquiries about the ability of a debtor to pay before granting any credit or increase in credit. At Second Reading, and in Grand Committee, I reminded your Lordships of the notorious Meadows case, where an original liability of just £5,750 ballooned to a staggering £384,000 and the court used judicial ingenuity to cancel the debt. I also referred to the case of a student, Rose Heiney, who was approved for her third gold card in two months, with a credit limit of £6,000 and drawing facilities of £500 in cash every day. Several times a day, advertisements appear on the television offering credit facilities to people notwithstanding their poor credit rating or them being subject to county court judgments.
	Subsection (3) of the amendment requires the potential creditor to make only,
	"such enquiries as may be reasonable and available".
	The subsection goes even further to modify the creditor's obligation to make inquiries. He is allowed to rely on any written statements of the debtor that are not manifestly incorrect or improbable. On the other hand, it will be of no use for a creditor to accept without proof that a student living in digs is in receipt of an annual income of tens of thousands of pounds a year or possesses assets of millions. To facilitate the checking of information provided by a potential debtor, subsection (6) allows the Data Protection Registrar to allow the exchange of information between creditors about the credit history of an applicant.
	The sanction for non-compliance with this section, that is, failure to check the creditworthiness of the potential debtor, is to be found in the proposed new Section 140A. Under new section 140A(1)(c), the court is to have the power to rule that a transaction shall be presumed to be unfair because of:
	"any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement . . . )".
	One of the things that would not have been done would have been to make adequate inquiries about the debtor's ability to pay. Adequate in this case means taking into account the very moderate and simple inquiries that proposed subsection (3) of this amendment requires. New Clause 140A gives the court very wide discretion to decide whether a relationship is unfair. Subsection (1) begins by stating that the court "may" make an order. Subsection (2) states that,
	"the court shall have regard to all matters it thinks relevant".
	The proposed new Clause 140AA is a necessary adjunct to new Clause 140A because it will concentrate the court's mind on the question of responsible lending. I hope it will also, when spelled out in black and white, concentrate the minds of those creditors who do not adequately take into account the debtor's ability to pay.
	I hope that the Minister will now agree that I have accommodated his one and only objection to the amendment as previously drafted—at least, it was the only objection that he raised at the time—and will now accept it as a useful strengthening of the Act by protecting potentially vulnerable debtors without adding one iota of burden to those creditors who already act responsibly. I beg to move.

Lord Sainsbury of Turville: My Lords, the noble Baroness, Lady Miller, and the noble Lord, Lord De Mauley, have tabled Amendment No. 5 in relation to the unfair relationships test in Clause 19, which provides for what is, in effect, a responsible lending duty. I am delighted that the noble Baroness has accommodated one of my objections, but I am afraid that it does not go to what seems to me to be the heart of the Government's objection to this.
	Before going into those details perhaps I may say that all the examples that the noble Baroness gives of what appear to be unfair relationships are exactly the issues that we want the court to consider. Where we part company is that we believe that an extremely complex and difficult issue of trying to pin down exactly what these unfair relationships are is likely to get us into far more difficulty; and of course it has the real danger of excluding the next lot of malpractices that lenders come up with. We want to keep the flexibility so that we can attack, if necessary, the new unfair practices that arise and do not get into the situation of saying that a particular practice is unfair in all circumstances, because in some cases it will not be.
	Amendment No. 5 seeks to introduce a duty on lenders to lend responsibly by requiring them to do certain things before offering credit and providing that a failure to comply with those procedural requirements creates an "unfair relationship". I dealt with the Government's position on responsible lending duties in Grand Committee, both in relation to the amendment previously tabled by the noble Baroness and also the amendment previously tabled in Grand Committee by my noble friend Lord Borrie and now re-tabled by the noble Lord, Lord Razzall, as Amendment No. 8. The Government believe that all lenders should lend responsibly. The manner in which they do so will depend on the needs of the customers they serve. For this reason we do not think that a specific duty with rigid procedural rules, of the type set out in this amendment, is necessary or appropriate. Nor do we believe that there is a need for a general duty on the face of the legislation. To adopt an approach requiring lenders to comply with a positive duty would demand definition of what is required of them. As I explained, we do not think that that would work.
	Amendment No. 5 attempts to address this problem by linking the applicability of the unfair relationships test to the issue of the lender making inquiries about a debtor's ability to repay. The Government believe that that is only one of many relevant factors, and that that is all it can and should be. The amendment seeks to elevate this issue above others in determining the existence of unfair relationships, and the Government do not believe that that is appropriate. The Government want to encourage responsible lending, and I believe that the Bill will do that. But they do not believe that this approach, with its propensity to lead to a multiplication of procedural rules for lenders, is the most effective way of ensuring that.
	The Bill is about balancing the interests of lenders with those of consumers. The Government believe that responsible lending comes with a proper recognition of risk, which is provided by the Bill through improved consumer rights and redress and enhanced OFT powers. I hope that, in the light of this explanation, the noble Baroness will withdraw the amendment.

Baroness Miller of Hendon: My Lords, I thank the noble Lord for his explanation of why he rejects even the accommodation that I made. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 20 [Powers of court in relation to unfair relationships]:

Lord McKenzie of Luton: moved Amendment No. 6:
	Page 15, leave out line 24.

Lord McKenzie of Luton: My Lords, the Government propose to amend Clause 20 by removing subsection (4). This provision was intended to prevent the court from setting aside judgments previously made, so as to give effect to the rule that a statutory jurisdiction to reopen a transaction does not enable the court to reopen a transaction that has been subject to a previous judgment made by the court. It replicates a provision in the 1974 Act.
	In Grand Committee, the noble Lord, Lord De Mauley, tabled an amendment in the same form but for somewhat different reasons to those for which the Government make this amendment. Having said that, I am grateful to the noble Lord for raising these points and the Government recognise the issues raised by the noble Lord and by others in discussions which the department has had with interested practitioners.
	We have reconsidered the impact of this provision in the light of current court rules operating in England and Wales, Scotland and Northern Ireland. We have concluded that subsection (4) would in practice serve as an impediment to the Government's policy intention, which is to enable consumers to access effective redress from the court under these provisions and that the court rules should be allowed to apply to these provisions in the normal way. If we left the provision as it stands, it would lessen the benefits of the Government's policy on unfair relationships. Therefore, the provision is best removed. I beg to move.

Lord De Mauley: My Lords, as the Minister said, we tabled this amendment in Grand Committee. Whatever the Government's motives, we are grateful to him for accepting it.

On Question, amendment agreed to.

Baroness Miller of Hendon: moved Amendment No. 7:
	After Clause 22, insert the following new clause—
	"APPROPRIATION OF PAYMENTS
	(1) Any payment made by a credit card or store account debtor in respect of the sum due from him may be appropriated by him at the time of making the payment to any part of that debt, and in the absence of any such appropriation it shall be deemed to be appropriated to the debt in the chronological order in which it was incurred.
	(2) Every statement of account sent to the debtor shall prominently and in simple language draw the attention of the debtor to the effect of this section."

Baroness Miller of Hendon: My Lords, the purpose of this amendment is to bring into line a segment of the law relating to banks and credit card companies which are in many cases banks or owned by banks. If I sign a cheque, my bank pays the bill on my behalf and debits my account with the appropriate sum. If I pay a bill by credit card, the credit card company pays the bill on my behalf and debits my account with the appropriate sum. What is the practical difference between these two transactions? The answer, in practical terms, is absolutely none. And yet, at the moment, there is a difference in the way that banks and credit card companies treat running accounts.
	I would like to explain, with some diffidence in the presence of so many learned lawyers and learned people on the subject, such as the noble Lord, Lord Borrie, the same simplified version of the law that I gave in Committee. In a running account, partial payments are made by the debtor which do not clear the account, while further debits are still incurred. The debtor has the right to specify which part of the account he is paying—which specific invoice perhaps. If he does not specify which part of the running account he is paying at the time of payment, then the creditor can do so at any time, including a bill that is now statute barred and no longer legally enforceable.
	However, in the case of banks, this rule is modified. There is a rebuttable presumption that the payments are automatically attributable to the earliest chronological debits. That was decided as long ago as 1816 by what every first-year law student knows as the rule in Clayton's case. The noble Lord, Lord McKenzie of Luton, remembered that from when he was a law student, and, I have to confess, it is one of the only cases I can still remember from when I was a law student. This rule has operated with no problems throughout the banking system ever since.
	There were, of course, no credit cards 150 years ago when Clayton's case was decided, but the principles are exactly the same. There is a chronological sequence of debits and credits, although in the case of banks there is sometimes a pre-existing cash balance in hand from which the payment may be taken. There is, however, one inappropriate practice operated by some—I stress, only by some—credit card companies which this amendment seeks to redress. They cherry-pick which part of a customer's account they are going to credit with a payment. The part that they choose to pay first is the part on which they earn the lowest interest. Often it is the opening balance transferred to them as a result of an offer of zero per cent interest on credit transfers for the first X months.
	There may be significant differences in interest charges between ordinary purchases and cash advances taken from a cash machine. But the purpose of this amendment is to bring banks and credit card companies, which as I have said are essentially the same, into line—that the normal rule which applies to banks should apply identically to credit card and store card debts; namely, first payments automatically clear first debits unless the customer says otherwise.
	When we debated this amendment in Grand Committee, the Minister took comfort from the contents of the actual agreements between the customer and the credit card company and cited the Consumer Credit (Agreements) Regulations. Assuming that I am addressing an above averagely sophisticated audience, I wonder how many of your Lordships have actually read the agreements attached to your credit cards. Indeed, I wonder how many of your Lordships' eyesight is even good enough to enable you to read the fine print without the aid of a very powerful magnifying glass. Furthermore, the purpose of this amendment is to protect card holders from a grossly unfair practice even if it is enshrined in an obscure clause in an agreement which the card holder cannot amend. If you do not accept the agreement, lock, stock and barrel, you do not get the card.
	The Minister also said that my amendment,
	"potentially imposes considerable administrative burdens for lenders".
	I clearly received exactly the same brief against my amendment as the Minister. I should point out that the banks and credit card companies do not seem to be beset by administrative burdens when they ensure that payments are appropriated in the way that is most beneficial to them. The fact that compliance with a necessary law may be inconvenient to somebody is no reason for Parliament not to pass it. That especially applies to the banking industry.
	The requirement to notify the customer of the right to elect, for which I provide in paragraph (2), can easily be complied with by a notice boldly printed on the monthly bill. Coping with a request to appropriate a particular credit to a particular debit can with equal ease be coped with by marking a box on the form, leading to the transaction being dealt with manually rather than by an automatic system.
	Not only do I suspect that such cases will be comparatively few in number, but the credit card companies cope with many such manual transactions every day when customers notify them of changes of address. Yes, it will impose an extra cost on the credit card companies, but we are talking about cases where the customer is not clearing his account immediately, but is incurring substantial interest charges—interest charges on which, whether he realises it or not, the customer is actually paying compound interest; and compounded monthly at that. The extra work will make a negligible dent in those interest charges.
	In any case, if the Minister's argument is correct, is he proposing that the 150 year-old rule in Clayton's case should be repealed for the convenience of the banks? In his reply, the Minister said that he knew of,
	"no regulatory rule requiring the allocation of payments in a particular way to clearing banks"—[Official Report, 8/11/05; GC 168.]
	He must have missed the early part of my speech to the Committee when I expounded the rule in Clayton's case, which the noble Lord, Lord McKenzie, recognised even before I mentioned it. That is the regulatory rule that the Minister sought. It is called the common law of England.
	The amendment puts banks, credit card and store card companies on the same footing for the benefit of the customer who needs Parliament's protection. I am most grateful to the noble Lord, Lord Razzall, for his having renewed the support that he gave to the amendment in Grand Committee, and I beg to move.

Lord McKenzie of Luton: My Lords, the noble Baroness's amendment is directed to the practice of some lenders in the credit and store-card sector applying payments made in relation to the account to the part of the account incurring the least interest. Again, this amendment was tabled in Grand Committee, and the Government resisted it. It is a practice in products where different rates might apply for different services—for example, cash advances—to apply any payment made to the account to the element of the indebtedness incurring the least interest.
	The Government's position is that that is an issue of product differentiation and transparency. Lenders are entitled to charge different interest rates on different parts of the account. Lenders are entitled to apply the payments to the account in accordance with the terms of the loan agreement. If the terms of the agreement permit the lender to apply the debtor's repayment in a particular order, that will bind the debtor.
	I stress that the Government have already made regulations to improve the quality and clarity of information provided to consumers before an agreement is made and on the face of the agreement. Under the Consumer Credit (Agreements) Regulations, the agreement must contain a statement explaining to the debtor how sums are applied and appropriated under the agreement. The issue of Clayton's case does not therefore arise. That statement must appear up front in the key financial information section of the agreement. That statement must also be included in the pre-contractual information provided to debtors before they enter into an agreement.
	That brings me to the issue of product differentiation. Lenders are free to inform consumers that they apply payments in a particular way, including that which is most advantageous to the debtor. Indeed, the department is aware that some lenders credit payments in respect of the total balance, or allocate payments in the way most favourable to the debtor. Others do not. The Bill is not designed to stifle product innovation or product differentiation. Along with the Government's other reforms in this area, it is designed to enable consumers to understand their agreements and to receive regular information about them. If a consumer does not want the lender to allocate repayments in a certain way, they need not choose that product.
	If the noble Baroness's concern is one of transparency, we believe that existing provisions already address that. As I said, the new regulations concerning the form and content of agreements require the inclusion of information about how payments are allocated. Furthermore, Clause 7 provides that, for statements issued in relation to running account credit agreements, the Secretary of State may provide for warnings about making payments of a prescribed description in prescribed circumstances. That could include payments made that are allocated in various ways. While some have lobbied for such a requirement, the department proposes to consult on the issue as part of its general consultation on the information requirements in the Bill to determine whether there is any consensus on that point.
	The noble Baroness's amendment also raises an issue of proportionality. It permits a debtor to specify how a repayment is applied to the account. In accounts with several applicable rates, depending on the service provided, the allocation could be quite complex. That imposes potentially considerable administrative burdens for lenders. If noble Lords reflect on the prospect of a whole raft of debtors making different choices at the point of payment, for lenders to have systems to cater for them all is a real administrative burden. In those circumstances, I ask the noble Baroness to withdraw the amendment.

Baroness Miller of Hendon: My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 30 [Guidance on fitness test]:

Lord Razzall: moved Amendment No. 8:
	Page 24, line 13, at end insert—
	"( ) The OFT shall include within the guidance a duty of licence holders to lend responsibly."

Lord Razzall: My Lords, I realise that this is another attempt on the part of the Opposition parties to move the Government further than they want to go, but it is important, for the reasons that the noble Lord, Lord Beaumont of Whitley, whom I see is no longer in his place, gave on his amendment. This amendment is dear to the heart of the citizens advice bureaux movement which, as we know, is at the forefront of dealing with the problems of those least well off in our society, the disadvantaged, with what citizens advice bureaux and, I think, the Government, perceive as irresponsible lending.
	I do not want to go over all the arguments that we had in Grand Committee. In Committee, this amendment was moved by the noble Lord, Lord Borrie, whom I see in his place. The Government need to be absolutely certain if they are to reject the amendment that it is unreasonable. As the Minister said on several occasions, the Government have a policy to avoid irresponsible lending and think that the Bill should do that. This amendment, which is small in words but important in principle, should be treated seriously by the Government. I hope that they will seriously consider including it. I beg to move.

Lord Borrie: My Lords, lending to someone who is already up to his or her neck in debt is one of the great mischiefs of a credit society. Some of the more extreme cases were cited not by myself, because I was unable to be present, but by the noble Baroness, Lady Howe of Idlicote, and others in Committee. I know that creditors use sophisticated computer modelling when determining how much to lend, at what interest, and so on, but they seem not to check whether repayments are affordable by looking at the borrowers' income and expenditure, including existing repayment commitments.
	On my behalf, the noble Baroness, Lady Howe, moved an amendment in Committee on the same lines as this amendment tabled by the noble Lord, Lord Razzall. It is to the effect that the OFT should include in its guidance on fitness to obtain a consumer credit licence from the OFT a requirement that in order to be fit to have such a licence, the applicant should lend responsibly. I commend this amendment to your Lordships. In Committee, the Minister said:
	"The OFT can [properly] look at any evidence of irresponsible lending when assessing a lender's fitness to hold a consumer credit licence".
	He said that the Bill does not include a specific duty to act responsibly,
	"as it is implicit in both the unfair relationships and fitness tests".—[Official Report, 8/11/05; col. GC 178.]
	He seemed then not to want an explicit duty to be imposed by the OFT's guidance to the creditor to lend responsibly because there would be pressure to compile a list of what is and is not responsible lending. The Minister could and should withstand robustly any such pressure and leave it to the OFT and the Consumer Credit Appeals Tribunal on a case-by-case basis to determine the precise meaning of responsible and irresponsible lending in any particular case.

Baroness Miller of Hendon: My Lords, we support this amendment moved by the noble Lord, Lord Razzall. Our name is not attached to it because it has just been put down. Otherwise, it would have been.

Lord Sainsbury of Turville: My Lords, the amendment tabled by the noble Lord, Lord Razzall, concerns guidance on fitness to be issued by the Office of Fair Trading in relation to its licensing function. This amendment is the same as that tabled by my noble friend Lord Borrie in Grand Committee, which, due to my noble friend unfortunately being ill at that time, was spoken to by the noble Baroness, Lady Howe of Idlicote.
	The OFT's guidance will provide lenders with information on those matters that in the opinion of the OFT as a licensing authority might indicate a lack of fitness to hold a consumer credit licence. The noble Lord, Lord Razzall, has suggested in his amendment that the issue of responsible lending should be covered by this guidance through an explicit duty to lend responsibly. I explained the purpose of the OFT's fitness guidance in some detail in Grand Committee. I shall not repeat what I said, other than that the OFT, as a licensing authority, issues licences to businesses which are fit to conduct consumer credit or related business. The draft OFT guidance on fitness states:
	"Fitness takes into consideration any matter which may have a bearing on your ability to deal with consumers, including credit competence and evidence of trading practices".
	Accordingly, it is generally the case that the guidance will take a negative form because it tells affected persons what types of conduct might expose them to OFT enforcement action or to being denied a licence.
	As I explained in Grand Committee, and in relation to Amendment No. 5 today, the Government believe that all lenders should behave responsibly when lending. However, they do not believe that the way to encourage this is through the setting of inflexible procedural rules. A positive duty to lend responsibly may, considered in isolation, appear attractive. However, by imposing such a positive duty, the consequence is that the guidance will need to provide lenders with sufficient information to comply with that positive duty. That would involve the compilation of a list of rules of what is and is not responsible lending.
	Given the many different ways in which lending can be undertaken, this could be a potentially complex and open-ended exercise. Such a list would also encourage lenders to think that, as long as they have complied with the list, they have lent responsibly. But that cannot be so in all cases. It would be inappropriate to require the OFT to include a specific positive duty to do something in guidance with no detail to back it up, and the Government do not accept that such an approach is valid. It would encourage a tick-box culture where businesses would claim both responsibility and fitness in lending simply because they tick all the boxes on the list.
	We want to encourage responsible lending. But we do not believe that the way to do this would be to include an unhelpful duty in the legislation or in guidance. We are convinced that it will lead to the development of a multiplicity of procedural rules, which we want to avoid. I think that that is a common theme which is running throughout our approach to this Bill. We want to give flexibility and not get tied down in specific procedural rules which can be used to suggest that unfair practices are fair. I hope that in the light of this explanation the noble Lord will withdraw his amendment.

Lord Razzall: My Lords, I am obliged to the Minister for his comments, which do not surprise me. However, this is one of the more fundamental points outstanding on the Bill. As the noble Lord, Lord Borrie, indicated, there is a distinction between the protection given to individuals in relation to the unfair relationships tests which will go to the courts and the overall obligation of lenders to lend responsibly, as the noble Lord, Lord Borrie, and others have indicated. It may be that there are many cases where there is not an unfair relationship determined by the courts, but where a lender has not lent responsibly. Therefore, we need to reflect before Third Reading on whether this is an issue where we would want to test the opinion of the House. In the mean time I would be delighted—not delighted, but happy—to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord De Mauley: moved Amendment No. 9:
	After Clause 37, insert the following new clause—
	"OFT'S GENERAL DUTIES
	After section 1 of the 1974 Act insert—
	"1A OFT'S GENERAL DUTIES
	(1) In discharging its functions under this Act to regulate the conduct of licensees, the OFT must, so far as is reasonably possible, act in a way—
	(a) which is compatible with the regulatory objectives; and
	(b) which the OFT considers most appropriate for the purpose of meeting those objectives.
	(2) The regulatory objectives are—
	(a) the protection of consumers;
	(b) the promotion of an efficient and innovative consumer credit industry;
	(c) maintaining a competitive market in consumer credit; and
	(d) avoiding unnecessary and disproportionate burdens on business.
	(3) In discharging its functions to issue guidance and regulate the conduct of licensees, the OFT must have regard to the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction.""

Lord De Mauley: My Lords, as I said in Committee in the context of the equivalent amendment that was tabled there, this amendment would set out the general duties and objectives of the OFT in the context of consumer credit. Before going further, I must reiterate my declaration of an interest. Let me briefly go through our reasons for originally proposing this amendment and explain how we have addressed concerns raised in Grand Committee.
	I explained that, in our view, powers given to the OFT, such as the,
	"right to monitor as it sees fit",
	and to impose requirements on licensees to do or cease to do that with which the OFT is dissatisfied were both inappropriate and excessive. I said that introducing an objects clause as proposed in the amendment would go some way towards ensuring that OFT regulation is measurable.
	I said that no good reason had yet been given for failing to specify the regulatory objectives of the OFT. The right reverend Prelate the Bishop of Worcester, who is not in his place, objected to our amendment in Committee on the grounds that he considered it unbalanced. We looked again at the amendment and to an extent saw his point. He said, however, that he would be open to the type of regulation suggested if the need to keep in check the explosion of the credit market was addressed in the amendment.
	We therefore felt that we should go back to the drawing board to see what was really necessary. We have concluded that a balance is needed, as the right reverend Prelate implied—that is, a balance between the interests of consumers and the interests of lenders. Accordingly, we have removed as a regulatory objective the words "lender confidence to ensure the widest possible access to credit". Although that was not the intention, we felt that that could have been interpreted as promoting the explosion of the credit market about which the right reverend Prelate was so concerned. We have placed the protection of consumers first in the order of regulatory objectives. Our amendment to Clause 19 would have gone further in the direction that the right reverend Prelate would like. We hope that we have gone sufficiently far in addressing his concerns.
	In raising his objections, among other things, the Minister said:
	"The amendment simply duplicates provisions already in the Consumer Credit Act 1974 and the Enterprise Act. The way in which the OFT should act in regard to its consumer credit functions is set out in Sections 1 to 5 of the 1974 Act".—[Official Report, 16/11/05; col. GC 307.]
	He also referred to Sections 1 to 8 of the Enterprise Act.
	When I spoke to the amendment before the Minister said these things, I had already acknowledged that the Minister in the other place had previously given those exact reasons, and I had explained why in our view they were not valid. These earlier Acts make no mention, for instance, of the protection of consumers in the context of consumer credit, or of the importance of competition which, as your Lordships know well, plays a, if not the, fundamental role in protecting consumers. Rather, the sections of the Acts to which the Minister referred busy themselves with annual reports and otherwise very general matters which, while important, do not lay down even in broad terms the parameters or regulatory objectives within which the OFT should operate in relation to consumer credit. We regard that as of vital importance.
	It is an inappropriate concept of management that any person in any walk of life, including a regulator, should set their own objectives. In this case, it is for Parliament. In his comments on the amendment in Committee, the Minister said that it suggested that there were concerns about the burdens that might be imposed on business and how those would be constrained. In response to this point he said that the OFT is under an obligation to "act proportionately", as a signatory to the Cabinet Office Enforcement Concordat where it is committed to minimising the costs of compliance for business by ensuring that any action it requires is proportionate to the risks, taking account of the circumstances of the case and the attitude of the operator. In response to that, I have to say that the concordat is voluntary and more honoured in the breach than in its observance. Those are the views of the better regulation people in the Cabinet Office themselves, as well as Hampton. Because of this and other problems with the concordat, it is being revised by the Government and, indeed, we are promised a draft regulatory compliance code imminently—it was supposed to have been at the turn of the year. We cannot leave something as important as this to a possible rewrite of a possible document that few people observe.
	The Minister also said:
	"The Hampton footnote has been considered separately from the main Hampton recommendations and we shall be consulting in the first half of 2006 on that point".—[Official Report, 16/11/05; GC 307.]
	With respect, that makes it sound as if the Government are proposing that we send off the cart, pursued in a rather desultory fashion by the horse.
	I reiterate that providing excessive and unfettered powers to the OFT may result in the consumer ultimately suffering a lack of choice, accessibility and affordability as creditors withdraw products and the market shrinks. I beg to move.

Lord Freeman: My Lords, I support my noble friend Lord De Mauley, who has moved this amendment with great clarity. As the noble Lord, Lord Razzall, so clearly delineated, the Minister has rejected the argument that there should be greater specificity in terms of the duties in the Bill, as well as in terms of defining what constitutes unfairness between borrowers and lenders. I am certain that my noble friend Lady Miller and the noble Lord, Lord Razzall, will ensure that we return to these issues at Third Reading, which is something we must do.
	My reason for supporting Amendment No. 9 has nothing to do with those earlier arguments concerning good regulation. There are other principles in terms of good regulation which this amendment to the new clause meets extremely well. It does so first by specifying in subsection (2) the regulatory objectives. That provides clarity, and the Minister's arguments advanced earlier should not apply to objecting to the statement of objectives. Subsection (d),
	"avoiding unnecessary and disproportionate burdens on business",
	sets out a clear principle that deserves to be repeated in the Bill not only in relation to consumer credit, but also to other matters. Finally, it makes clear the most important principle that:
	"In discharging its functions to issue guidance and regulate the conduct of licensees, the OFT must have regard to the principle that a burden or restriction . . . should be proportionate to the benefits",
	arising from the regulation. Again, it is admirable that this amendment has been moved so that we can get it into the Bill. I hope the Minister will show some sympathy to the motives that lie behind it.

Lord Sainsbury of Turville: My Lords, the general principles for the way in which the OFT carries out its regulatory enforcement activities as a regulator working on behalf of the Crown are set out in Sections 1 to 8 of the Enterprise Act 2002. There are provisions here relating to corporate governance and the OFT board, requiring the OFT to,
	"have regard, in addition to any relevant guidance as to the governance of public bodies, to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to OFT".
	There is also a requirement for an annual plan and report which stakeholders, including ministerial departments, are consulted on. The OFT's more general functions are also set out here, notably that a,
	"Minister of the Crown may request the OFT to make proposals or give information or advice on any matter relating to its functions; and the OFT shall, so far as is reasonably practicable and consistent with its other functions, comply with the request".
	These ground rules for how the OFT operates were laid down in Parliament when both Houses debated and passed the Enterprise Act 2002.
	The way in which the OFT should act with regard to its consumer credit functions is set out in Sections 1 to 5 of the 1974 Act. This includes: keeping under review both the Act and the relevant social and commercial developments; enforcement and working of the Act; production of information and advice; and annual reporting obligations on the operation of the Act, as well as the oversight powers of the Secretary of State. The Act sets out fairly clearly the general functions of the OFT. Those include raising public awareness of the benefits of competition and promoting good consumer practice, including through operating arrangements for giving formal approval to codes of practice which are intended to regulate business conduct, with the aim of safeguarding or promoting the interests of consumers.
	Given that, I believe that what has been set out is already more than sufficient when considering that the OFT is also subject to the usual range of accountability measures such as NAO scrutiny and appearances before Select Committees. Decisions of the OFT could also be subject to judicial review. Obviously that is a last resort, but the fact remains that the sanction is there and could be used if necessary.
	The amendment also suggests that there is concern about the burdens that may be imposed on business and how these will be constrained. However, the OFT is under an obligation to act proportionately as a signatory to the Cabinet Office Enforcement Concordat, where it is committed to minimising the costs of compliance for business by ensuring that any action it requires is proportionate to the risks, and taking account of the circumstances of the case and the attitude of the operator. So I believe that the amendment simply duplicates existing provisions and is therefore unnecessary.
	I hope that this explanation will allow the noble Lord to withdraw the amendment.

Lord De Mauley: My Lords, I thank my noble friend Lord Freeman for his support and the Minister for his response, even if it does not actually hit all the points I raised. No doubt he will be able to read what I said in Hansard. As my noble friend Lady Miller pointed out, while we do not propose to harass the Minister this evening, in view of the absence of so many of his noble friends on business vital to the future of the Labour Party, if not the country, we reserve our right to bring the amendment back at Third Reading. I beg leave to withdraw it.

Amendment, by leave, withdrawn.
	Clause 38 [Power of OFT to impose requirements on licensees]:

Lord De Mauley: moved Amendment No. 10:
	Page 32, leave out lines 12 to 19 and insert—
	"( ) This section applies where the OFT has reasonable grounds for believing that a licensee or an associate or a former associate of a licensee—
	(a) has engaged in conduct which breaches any provision of, or under, the 1974 Act;
	(b) is engaging in such conduct;
	(c) is likely to engage in such conduct."

Lord De Mauley: My Lords, as I explained in Committee, this amendment introduces the concept that any use by the OFT of what are called intermediate powers under the licensing provisions must be capable of being objectively justified. I said that while we supported the broad thrust of the reforms to the licensing regime, we were concerned with the wide discretion given to the OFT under Clause 38. Amending Clause 38 so that the OFT had reasonable grounds to impose requirements on licensees, as opposed to being dissatisfied with a licensee's conduct, would provide some of the consistency and clarity that the industry should expect from the OFT when discharging its functions under the Act.
	The key provision in Clause 38 allows the OFT to take action against a business when it is dissatisfied with any matter in connection with that business, whether or not it relates to a licensing issue. I have explained at length that in our view that gives far too wide a discretion to the OFT. The discretion should instead be restricted to circumstances in which there has been a breach of the licensing criteria, which themselves should be objectively set.
	I have pointed out the concerns raised by the Joint Committee on Human Rights, which among other things went to the broad drafting, the lack of specificity in relation to the conditions in which the OFT's powers were exercisable, and the entirely unfettered scope of such power, which failed to satisfy the requirements of reasonable legal certainty and gave rise to the risk of the disproportionate use of power in practice.
	In responding to our concerns with the discretion allowed to the OFT in the event that it is "dissatisfied", in the debate on this amendment in Grand Committee, as in the case of the previous amendment, the Minister pleaded the Cabinet Office Enforcement Concordat. We respond, as we did to the previous amendment, that the concordat is voluntary, is widely ignored and is more honoured in its breach than its observance, and that because of this and other problems it is well acknowledged that it needs to be revised. The Minister also said that,
	"the OFT should be able to act to protect consumers. That is why we have proposed this power to impose requirements on licensees. The OFT has produced a note on requirements, which is in the House Library and gives more information on how the OFT intends to use this power".—[Official Report, 16/11/05; col. GC 311.]
	The note is helpful but it does not resolve our concerns. Much of it is vague. Other sections repeat parts of the Bill and focus on procedural matters. Key issues on where the boundary lies are not discussed in great detail. There is one part of the guidance that we find particularly helpful, however. It states:
	"The OFT will normally be dissatisfied with a licensee or applicant's conduct if the OFT has evidence that the conduct: causes or could cause consumer detriment and is directly linked to the activities covered by the licence or the licence applied for".
	Why, though, could we not have had that in the Bill? It is a vitally important principle.
	In Grand Committee on this amendment the Minister gave two examples where the OFT might take action if it were dissatisfied: one was where there were problems with certain employees of a lender explaining credit agreements to customers; and the other where a debt collector's employees were unfairly pressurising customers by calling very late at night. He said:
	"The amendment before us would severely limit the effectiveness and flexibility of the OFT's powers to impose requirements on licensees by limiting the circumstances under which it could impose requirements. I have explained that we are not talking about fitness to hold a licence or breaching specific provisions in the Act, but about general conduct of a licensee that could cause consumer detriment. Neither of the examples that I have just given breach any specific provision in the Act, but I am sure that Members of the Committee will agree that they are likely to cause considerable consumer detriment, and that something should be done to deal with that. That is what the requirements are intended for. The amendment would prevent those cases being dealt with because of the way in which it limits the circumstances in which the requirements could be imposed. That would reduce consumer protection as the OFT's ability to improve the conduct of licensed business would be curtailed".—[Official Report, 16/11/05; col. GC 311.]
	Of course the Bill would allow the OFT to deal with the two examples to which the Minister referred—that is what Clause 19 on unfair relationships is meant to deal with. So the Minister's objections to it are unconvincing.
	The Minister, in responding to the quote from the JCHR in Grand Committee, said:
	"There is, therefore, a very good argument that those powers fall within the exception to Article 1 Protocol 1 of the convention; that is, they are not about taking away assets from people, but about controlling the use of those possessions, which is why it is compatible with human rights legislation".—[Official Report, 16/11/05; col. GC 312.]
	In the opinion of one of the most eminent lawyers in this area, Michael Beloff QC, which many of your Lordships will have seen, on the contrary, there is indeed a significant risk of incompatibility with Article 1 Protocol 1. Whether he or the Government are right, this is clearly a grey area. Surely, if only to obviate the considerable legal costs that will undoubtedly be incurred should the legislation proceed as drafted, it would be simply irresponsible not to do all that reasonably can be done to remove that risk. That is what the amendment seeks to achieve. I beg to move.

Lord McKenzie of Luton: My Lords, Clause 38 enables the OFT to interpose intermediate sanctions on licensees. These sanctions are called requirements.
	As was explained by my noble friend the Minister in Grand Committee, requirements are an important new tool for the OFT to ensure an effective, targeted licensing regime. Currently the OFT's powers are limited to refusal of an application or granting a licence on different terms. They can also vary, revoke or suspend an existing licence. The effects of these sanctions can be severe as they can prevent people trading.
	The OFT adheres to the Cabinet Office Enforcement Concordat. It might be voluntary, but I stress that the OFT adheres to it. This means that the regulatory action it takes must minimise the costs of compliance to business by ensuring that any action be proportionate to the detriment caused. This in turn means that the OFT is able to act only in the most serious cases, where a person is simply not fit to hold a licence.
	In many cases, the OFT is powerless to address consumer detriment because withdrawing a licence would be disproportionate. For example, if there were a problem with the sale of credit in one branch of a national company, it would not be justifiable to revoke the whole company's licence. A similar situation occurs where one employee is intimidating customers when collecting debts.
	These cases may not be serious enough to call into question the fitness of a person to hold a licence but the OFT should be able to act to protect consumers. That is why we have proposed this power to impose requirements on licensees. The OFT has produced a note on requirements, which was acknowledged and is in the House Library. It gives more information on how the OFT intends to use this power. It states that dissatisfaction is dependent on the OFT having evidence that the conduct causes, or could cause, consumer detriment and is directly linked to the activities covered by the licence or licence applied for. The note also gives examples of cases where requirements may be considered. The OFT is statutorily obliged to have regard to its guidance in exercising the requirements power.
	Again I refer to practical examples, although they may have been pre-empted to a certain extent by the noble Lord, Lord De Mauley. The OFT could use this power to address a wide range of problems. I state again that if there were problems with certain employees explaining credit agreements to customers, a requirement for training employees could be imposed. It might provide that sales representatives in a named branch are trained to inform consumers how they can cancel their agreements. If a debt collector's employees were unfairly pressurising customers by calling very late at night, a requirement could stipulate that they should call only between 8 am and 8 pm. A requirement might also refer to a person other than the licensee. However, it would be addressed to and binding on the licensee and it could require that a particular person did not undertake a specific activity, such as collecting debts in person.
	The amendment would severely limit the effectiveness and flexibility of the OFT's power to impose requirements on licensees by limiting the circumstances under which it could impose requirements. I have explained that we are not talking about fitness to hold a licence or breaching specific provisions in the Act but about general conduct of a licensee that could cause consumer detriment. Neither of the examples I have just given breach any specific provision in the Act, as they would need to before requirements could be imposed under the amendment before us, but I am sure that your Lordships will agree that they are likely to cause considerable consumer detriment and that something should be done to deal with this. Indeed, the noble Lord said that there is general agreement on the principle of intermediate sanctions. That is what requirements are intended for. Unfortunately, the amendment would prevent these cases being dealt with at all because of the way in which it would limit the circumstances in which requirements could be imposed. That would reduce consumer protection as the OFT's ability to improve the conduct of licensed businesses would be curtailed.
	I still believe that sufficient safeguards are built into the Bill to prevent the OFT abusing the powers in Clause 38. The OFT will publish guidance on how it will use these powers. As I have indicated, an OFT note on requirements has already been lodged in the Library. The OFT will have to let licensees know that it is minded to impose requirements, to explain why, and to give them an opportunity to make representations on the proposal. Moreover, requirements can be appealed to the new appeals tribunal. This provides a safeguard against the OFT exercising these powers unreasonably. I urge the noble Lord not to weaken the extra consumer protection which the Bill brings and hope that he will agree to withdraw his amendment.

Lord De Mauley: My Lords, I thank the Minister for his response. I do not agree with all that he said; indeed, I recognise much of his wording from Grand Committee, which I had sought to contradict. As we discussed, we will not pursue the matter this evening. I will read the Minister's comments carefully and I hope that he will do me the courtesy of reading mine. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord De Mauley: moved Amendment No. 11:
	After Clause 42, insert the following new clause—
	"OFT GUIDANCE
	(1) After section 183 of the 1974 Act insert—
	"183A OFT GUIDANCE
	No guidance is to be published under this Act without the approval of the Secretary of State."
	(2) In preparing or revising guidance under that Act, the OFT shall consult such persons as it thinks fit."

Lord De Mauley: My Lords, on reflection, subsection (2) of the amendment is not necessary. I therefore propose to speak only to subsection (1). I will not expect the Minister to address subsection (2).
	As I explained in Committee, the corresponding amendment then proposed, and this amendment, would require the OFT to produce guidance before the provisions on unfair relationships came into force. It is therefore concerned with ensuring greater certainty about what is meant by "unfair relationships". I reiterated that there is a lack of detail in the Bill; and that far too many of the significant policy areas had been left to secondary legislation and guidance from the OFT, none of which had been clarified by disclosures to date. I said that this was unsatisfactory and would create uncertainty not only for business but for consumers.
	In his response to the corresponding amendment in Committee, the Minister said that the second part of the amendment then proposed was unnecessary because the relevant provisions of the Bill already require the OFT to consult on the guidance. Accordingly, we have dropped that part of the amendment. However, in response to the first part of the amendment, the Minister said:
	"Once the Bill is passed, the OFT will consult on the guidance, which will be expanded to give examples of requirements and more details of the procedure that the OFT will go through".—[Official Report, 16/11/05; col. GC 314.]
	The preoccupation with undebated guidance seems to be an abuse of Parliament. Important principles setting out the framework within which regulators operate should be set out in law and not left to guidance. Accordingly, I beg to move.

Lord Borrie: My Lords, the noble Lord is right to withdraw the second part of the amendment because it is unnecessary. I wish that he had withdrawn the first part for being inappropriate. The OFT is a non-ministerial government department. It has existed for more than 30 years. Its governance, including its accountability and responsibilities, was set out fairly recently in the Enterprise Act 2002, as the Minister explained this evening in relation to another amendment. It is not just that the independence of the OFT would be affected adversely by this amendment; I suggest to the DTI, which as the most closely related ministry is the ministry you would expect to offer comments, that the OFT's guidance emerges out of its experience over the years, especially on licensing, creditors, their problems and malpractices and so on. The DTI will have less to do with that now because, as noble Lords have noticed, appeals against OFT decisions on licensing, which used to go to the DTI, will under this Bill go to the consumer credit appeals tribunal. Without being rude to the DTI, especially with my noble friend the Minister in his place, I wonder whether it would add value to the work of the OFT in issuing guidance, because it does not have, and will in future have less, day-to-day case law experience of relationships between the licensor and the creditors.

Lord Freeman: My Lords, what the noble Lord, Lord Borrie, has just said sounds plausible, and I am sure that it would read plausibly, but it is wrong. This is an important point of principle and I hope that my noble friends on the Front Bench and the Liberal Democrats will press the matter further, because I find it difficult to accept that the Government can have it both ways.
	The Minister has been very eloquent in arguing that detailed specification is not required in the Bill, either for certain duties and responsibilities of the OFT or in other aspects of the Bill. The noble Lord, Lord Borrie, referred to the appeals procedure and the Minister referred to the Enterprise Act. But the guidance to be issued by the OFT is extremely important and should be indirectly questioned in Parliament. That can be done only if the Secretary of State takes responsibility for the approval of that guidance so that he can be accountable to Parliament. I do not like the trend, particularly with the greater powers being given to the OFT, of guidance being issued, undoubtedly after a lot of consultation, without an audit trail, a sense of accountability and a reality of accountability to Parliament. That is why I support the amendment and hope that it is pressed further at a later stage.

Lord Sainsbury of Turville: My Lords, Clause 42 requires the OFT to publish guidance on how it proposes to exercise its powers to impose requirements. The OFT must have regard to it when exercising its powers under these sections. This is one of two pieces of guidance that the OFT is required to publish by the Bill, the other being the guidance on fitness. The OFT will be able to revise the guidance based on practical experience, if new issues arise. However, the amendment before us requires that this guidance, setting out how the OFT will discharge its regulatory duties, must be approved by the Secretary of State. That would undermine the independence that Parliament gave to the Office of Fair Trading under the Enterprise Act 2002.
	One problem of being a Minister and doing the same job for seven and a half years is that these issues come round at regular intervals. When we had the great debate on the Enterprise Bill, I remember noble Lords in the Opposition saying that it was absolutely fundamental that the Office of Fair Trading should be an independent body, which was why we have the various regulations, and that the last thing that was required was the Secretary of State intervening in this. Having made the right decision, it seems extraordinary to come back to the question and to go in exactly the opposite direction, saying that it is absolutely vital that the Secretary of State should have control over the guidance.
	At the time that the Enterprise Act was passed, Parliament concluded that the OFT should be independent of government and should exercise its functions independently of Ministers. To that end it was constituted as a non-ministerial department under the control of a chairman and a board. I am sure that noble Lords will remember that we had lengthy debates on just that issue. This amendment goes against this approach. It would require the OFT to submit to Ministers its guidance on issues under this Act for their approval. This would mean that the OFT would, in effect, no longer be a regulator that was independent of government, but would have to obtain ministerial clearance before it could publish documents which indicate how it would enforce the Consumer Credit Act and the issues that it would take into account when doing so. This would set a dangerous precedent, whereby the independence bestowed on the OFT by Parliament through the Enterprise Act 2002, could be whittled away through successive pieces of legislation dealing with different subject areas. This could lead to a very piecemeal approach to enforcement by the OFT, as it would have to have regard to whether they were an independent regulator as set up by the Enterprise Act, or subject to ministerial oversight under the Consumer Credit Act, or any other subsequent piece of legislation that took account of this precedent.
	The only part of the Act that requires the OFT to obtain ministerial clearance is the statement of policy in relation to civil penalties. That is a special case, as it allows the OFT to impose fines for breaches under the licensing regime. This goes beyond its normal role as a market regulator, and therefore additional safeguards have been included. Also, as I have mentioned previously, there are already safeguards regulating the way in which the OFT must act in the discharge of its statutory duties as well as the usual range of accountability measures such as NAO scrutiny, appearances before House committees and the ultimate sanction of judicial review. These will also help to ensure that there are no problems with the guidance that would necessitate formal signing off by the Secretary of State.
	I hope that this explanation will allow the noble Lord to withdraw the amendment.

Lord De Mauley: My Lords, I thank my noble friend Lord Freeman for his support and the Minister for his response. I take seriously the comments of someone as knowledgeable and experienced as the noble Lord, Lord Borrie, and I shall read his comments carefully, as I will the words of all noble Lords who have spoken. For reasons that we have already discussed, we shall hold this amendment, as with other amendments, over to Third Reading. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 45 [Duties to notify changes in information etc.]:

Lord De Mauley: moved Amendment No. 12:
	Page 37, line 36, after "unless" insert—
	"(a) the change in circumstances is significant and not in the ordinary course of the business; and
	(b)"

Lord De Mauley: My Lords, as I explained in Committee, this amendment relates to the obligations placed in the Bill on each holder of a consumer credit licence to inform the OFT of any changes in circumstances at all to the information supplied in relation to its application and would limit such obligation to information that is significant and not in the ordinary course of business.
	In Committee the Minister kindly pointed out that because the amendment we then proposed ended with the word "or", it would have widened the scope of the changes that it would be necessary to notify to the OFT. Our intention, as he rightly identified, was to narrow that scope. Accordingly, we have returned with an amendment identical save for the fact that it ends with the word "and", which we hope and believe achieves the objective.
	The Minister also said that,
	"we do not want licensees to have to notify the OFT of every comma in the wrong place. That would be absurd and time-consuming for the licensee and a waste of resources for the OFT. So a licensee is not required to notify the OFT of any clerical errors or omissions that do not affect the substance of the document".—[Official Report, 16/11/05; col. GC 316.]
	My concern is of a need constantly to be reporting immaterial changes. Clerical errors and omissions are at the bottom end of the scale and by no means include all immaterial changes. The danger lies in having to report the trivial and unimportant, and that concern was not at all assuaged by the words of the Minister in Committee, so I beg to move.

Lord Sainsbury of Turville: My Lords, I am slightly unexcited about this because according to my notes the amendment still ends with the word "or". Therefore, my comments are directed to that point and to an extension rather than a reduction in the amount of information which must be provided. In the circumstances, and as a number of these issues will return at Third Reading, it would be preferable for us to take a further look at the measure. I am sure that the noble Lord will bring the amendment back and I will then be able to make appropriate comments. I hope that the noble Lord will withdraw the amendment now and bring it back at Third Reading.

Lord De Mauley: My Lords, I thought for a moment that the Minister was going to accept the amendment. However, in the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 50 [Officers of enforcement authorities other than OFT]:

Lord McKenzie of Luton: moved Amendment No. 13:
	Page 42, line 20, leave out from "against" to "in" in line 21 and insert "the officer, the enforcement authority of which he is an officer or the OFT"

Lord McKenzie of Luton: My Lords, this is a technical amendment to change subsection (3) of new Section 36F to ensure that the clause does what was originally intended.
	Clause 50 deals with officers of enforcement authorities other than the OFT. New Section 36F(2) makes the OFT responsible for the actions of these officers while they are fulfilling their duties under Section 36C (access to premises) and Section 36D (access to premises under warrant). However, new Section 36F(3) disapplies new Section 36F(2) in the case of criminal proceedings against an officer or the enforcement authority. It does not currently mention the OFT, and we believe that, for the sake of clarity, the OFT should be specifically mentioned. This amendment therefore just clarifies the position as originally intended. I beg to move.

On Question, amendment agreed to.

Baroness Miller of Hendon: moved Amendment No. 14:
	After Clause 61, insert the following new clause—
	"EXTRA-TERRITORIAL APPLICATION
	In section 75 of the 1974 Act (liability of creditor for breaches by supplier) after subsection (5) insert—
	"(6) The liability of a creditor under this section shall also apply to a transaction effected after the passing of the Consumer Credit Act 2006 outside of the United Kingdom as well as to one effected within it.""

Baroness Miller of Hendon: My Lords, I am returning to this amendment, which I withdrew in Grand Committee at the behest of the Minister, the noble Lord, Lord McKenzie of Luton.
	Section 75 of the 1974 Act provides that if the holder of a credit card has a claim against a supplier of goods or services paid for with that card, he has an identical claim against the credit card company, which in turn has a right of indemnity against the supplier. The objective of this provision, which has operated for over 30 years, is to give the customer additional protection against rogue traders and to take into account the far stronger position to obtain redress that the credit card company is in compared with the customer. I have no idea how many times customers have invoked the protection of this provision since the 1974 Act was passed. Mostly, I suspect, such claims have been quietly disposed of without recourse to the courts.
	A problem arises in the interpretation of this very straightforward provision. The credit card companies insist that it applies only to transactions taking place in the United Kingdom. The 1974 Act says no such thing. The amendment is designed to put beyond argument that the protection attaches to holders of United Kingdom credit cards no matter where a transaction takes place. Probably, financial muscle is even more necessary to a United Kingdom-based customer against some trader in a remote foreign holiday resort than in dealing with a United Kingdom trader, who may fall under the jurisdiction of the local trading standards officer.
	These days, many transactions with overseas suppliers are effected over the Internet with credit cards. A customer should not be involved in an esoteric argument when he presses the "send" button on his home computer on whether the transaction is taking place in the United Kingdom or in some foreign spot where the supplier's computer terminal happens to be. The simple fact is that credit card companies derive considerable benefit and profit from the overseas transactions of their customers. They even derive extra profits by the manipulation of the rates at which currency conversions are made. This is not the time or place to discuss that topic. It is sufficient to say that credit card companies have ample resources to meet the comparatively few claims that are likely to arise, which is why they spend so much time and effort to persuade card holders to use their cards abroad. They place emphasis on the card being usable worldwide in a huge number of international outlets; you hear about that in their advertisements all the time. This provision would also ensure that the credit card companies will carefully investigate and ensure the integrity of the foreign suppliers on whom they bestow the cachet of being one of their accredited merchants.
	In reply to the debate in Grand Committee, the Minister was kind enough to say that I had raised "an important issue". The issue is still there. I was invited to withdraw the amendment, as there was a case before the Court of Appeal on the very subject. I regret that I do not know what has happened since last November. I suspect that nothing has happened; because I would have thought that any result would have been widely reported. However, even if the Court of Appeal has decided one way or another, I have no doubt that later, much later, your Lordships' House will be required to give a final, definitive ruling.
	Customers have been waiting for more than 30 years for this issue to be settled. There is really no reason why they should be kept waiting any longer. However, there is a good reason why Parliament should not delay in resolving the confusion once and for all and right away. If it is not done now, when will it be done? It is likely that there will not be another consumer credit Bill for a generation. If we settle the problem now, it will not matter if the Court of Appeal, or even their noble and learned Lordships, come to the same conclusion. If we pass this amendment now, it will not affect or prejudice pre-existing transactions, because the legislation is not retrospective. It most certainly will not prejudice the Court of Appeal or this House, because the judges will decide the case on what the law was at the time of the transaction. I am certain that the judges are too sophisticated to think that Parliament was changing the law instead of merely clarifying it.
	Clarification is urgently needed, because we cannot afford to wait for the end of the present litigation. The Minister indicated in Grand Committee that in due course something might need to be done. I submit that the time has come. I very much hope that he will now accept the amendment. I beg to move.

Lord McKenzie of Luton: My Lords, the noble Baroness has raised an issue that is still important. As she acknowledged, we had the opportunity to discuss this in Committee last November, when a similar amendment was tabled.
	At that stage, I explained to the noble Baroness that the issue was the subject of an ongoing court case, with the Office of Fair Trading due to appeal the High Court's decision on extra-territorial application of Section 75 to the Court of Appeal. The noble Baroness seemed to agree that it would be inappropriate to act before that appeal had been heard, and withdrew the amendment.
	That appeal is provisionally scheduled to begin at the end of this month. Unfortunately, we have no indication of how long it might be before a judgment is made. However, it would seem unlikely that the case will be resolved before the Bill receives Royal Assent, which, I hope, is not too far away. In any case, I am sure that noble Lords will agree that it would still be inappropriate to amend Section 75 before the case reaches its conclusion and we have had time to consider its implications. Once the court reaches its conclusion, the Government will consider what action, if any, needs to be taken. With that explanation, I hope that the noble Baroness will withdraw her amendment.

Baroness Miller of Hendon: My Lords, I thank the Minister and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord De Mauley: moved Amendment No. 15:
	Before Clause 62, insert the following new clause—
	"DATA SHARING
	(1) In this section—
	"authorised person" means any person who is—
	(a) a consumer credit business or consumer hire business; and
	(b) a data controller;
	"data controller" has the meaning given by section 1 of the Data Protection Act 1998 (c. 29) (basic interpretative provisions);
	"personal data" has the meaning given by section 1 of the Data Protection Act 1998.
	(2) It shall be lawful for an authorised person to disclose to a credit reference agency any personal data relating to a debtor which are processed by him if the conditions in subsection (3) are satisfied, notwithstanding that the debtor has not given his consent to such disclosure.
	(3) The conditions are that—
	(a) the authorised person has given the debtor notice of his intention to disclose the debtor's personal data under this section and obtained proof of delivery of such notice to the address given for the serving of notices upon the debtor in the agreement between the debtor and the lender; and
	(b) the debtor has, within 28 days of the date of that notice, failed to give the authorised person notice that he does not consent to the disclosure of his personal data.
	(4) It shall be lawful for—
	(a) a credit reference agency, or
	(b) an authorised person,
	to process and use personal data disclosed under subsection (2).
	(5) Regulations may make further provision in relation to disclosure of personal data under this section."

Lord De Mauley: My Lords, as I explained in Committee, the amendment introduces a new clause to modify the Data Protection Act 1998, in respect of an agreement entered into before that Act was contemplated and which would not have specifically included the debtor's agreement to disclosure, allow a lender to disclose to a credit reference agency information about a debtor, without the consent of that debtor, where 28 days' notice had been given to that debtor and he failed to respond. Concerns have understandably been widely expressed in debates on the Bill about debtors being sucked into a morass of unsustainable debt from which escape is difficult because they incur liabilities which their means will never permit them to repay.
	As I explained in Committee, all this amendment seeks to do is, from a data-sharing perspective, to bring lending agreements entered into before the Data Protection Act on to a par with those entered into since. In stating his objections to the amendment, the Minister said:
	"We need to fully understand the wider implications that such a provision may generate. We also need to consider carefully whether the potential benefits gained would be proportionate to the loss of the right of privacy for the individuals concerned".
	In an attempt to address these concerns by ensuring that the debtor does indeed have the best possible chance of seeing the notice and then, if he wishes, objecting to disclosure, which would be respected, we have changed the amendment to add the words,
	"and obtained proof of delivery of such notice to the address given for the serving of notices upon the debtor in the agreement between the debtor and the lender".
	The Minister also said,
	"the amendment does not ensure that the data shared would be so used".
	We are not sure that you can compel use by legislation, but nor do you need to do that. Lenders are crying out for more and better data upon which to base their lending decisions.
	The Minister also had concerns about what information should be shared. He stated:
	"For example, should it include all or any of the following: the date of the agreement; the period of the agreement; the amount borrowed or credit limit; the updated monthly balance; the debtor's payment history detailing whether they pay on time or fall into arrears; the date the account was closed or defaulted; the default amount if relevant; and the debtor's previous balances or credit limits".—[Official Report, 16/11/05; GC 320.]
	The answer is that it should include information to the same level of detail that is already permitted to be disclosed in agreements entered into since the Data Protection Act. The amendment ties in with the Data Protection Act 1998. It turns up "personal data", which we say has the same meaning as that given in the 1998 Act. Consistency is achieved by this mechanism. I beg to move.

Lord McKenzie of Luton: My Lords, before I respond, on behalf of my noble friend Lord Sainsbury, I offer his apologies to the House. He had to leave early because he is committed to a meeting with foreign visitors. I hope that noble Lords will accept his apologies.
	With this amendment, as with some others tonight, there is a sense of déjà vu—or, as a football commentator said, "déjà vu all over again". The amendment raises an important issue that has been the subject of considerable discussion throughout the history of the Bill. Indeed, a similar amendment to this was tabled in Committee in your Lordships' House, although I acknowledge the change that has been made to it to deal with receipt of notice. Without repeating the same arguments around data sharing in full, I should like to summarise the Government's position.
	The Government believe that it is important to explore the benefits that data sharing in the credit industry may bring in encouraging responsible lending. However, it must be recognised that data protection laws exist to protect the general public interest in data privacy. We need to ensure that any encroachment on data privacy is necessary and proportionate.
	As I reminded noble Lords in Committee, the Government have committed to consult on data sharing to establish the most proportionate response to the issue. The consultation document is currently being prepared and will be published as soon as possible. If the consultation reveals that legislation is necessary, we will look for the first available opportunity for this. It would be imprudent in these circumstances to pre-empt that consultation, particularly given the importance of the issue of data protection.
	Rushing our approach to data sharing now would also run the risk of overlooking the wider context. In particular, we would need to be absolutely clear that any legislation on data sharing by the credit industry contained the appropriate provisions to ensure that those sharing the data were not in breach of the data protection principles or requirements of the Data Protection Act. It is not altogether clear that the amendment tabled by the noble Lord fulfils those requirements.
	I should also point out that, if industry is convinced of the necessity and benefit of data sharing on historic accounts, there is nothing to stop it proactively seeking debtors' individual consent to do so, on an opt-in basis. Indeed, there have been examples where industry has done this.
	With this explanation, I hope in the circumstances that the noble Lord will feel able to withdraw his amendment.

Lord De Mauley: My Lords, I thank the Minister for his response and I am grateful to him for his comments, which I will read with care. As previously discussed, we will, for the reasons given, beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	House adjourned at twenty-two minutes before nine o'clock.